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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


WHEN  THE  WORKMEN 
HELP  YOU  MANAGE 


BY 
WILLIAM  R.  BASSET 


NEW  YORK 
THE  CENTURY  CO. 

1920 


Copyright,  1919,  by 
The  Centuky  Co. 


Copyright,  1919,  by 
A.  W.  Shaw  Company 


Copyright,  1919,  by 

MiLLBR,    PRANKLIN,    BASSET    AND   COMPANY 

Copyright,  1919,  by 
Efficibncy  Company 


Published,  October,  1919 


FOEEWORD 

We  are  not  now  asked  by  labor  to  find  ways  to 
pay  higher  wages  through  shorter  hours.  That 
is  only  one  small  phase  of  the  employer- 
employee  situation.  What  we  are  now  really 
asked  (although  not  always  in  precise  words) 
is  to  devise  some  method  by  which  the  very 
wage  system  can  be  saved.  It  is  a  challenge  to 
show  that  capital  has  a  function. 

The  fullest  justification  would  be  to  show  that 
the  individual  is  better  off  under  a  wage  than 
under  any  other  system — that  he  is  not  a  mere 
machine  but  a  part  of  industry  equal  in  dignity 
to  any  other  part. 

I  hold  that  capital  can  be  justified — if  only 
it  is  intelligent. 

Through  some  years  past,  as  a  result  of  my 
own  and  my  organization's  experiences  in  a 
thousand  and  a  half  industrial  plants,  I  have 
been  steadily  drawn  to  the  conclusion  that  the 
man  is  bigger  than  the  machine — that  the  best  of 
industry  cannot  be  brought  out  until  the  right 
relation  is  discovered  between  the  employer  and 


G89037 


vi  FOREWORD 

the  employee.  By  right  relation  I  denote  one 
which  permits  both  parties  to  express  them- 
selves in  their  work,  to  make  satisfactory  and 
continuous  profits  on  the  clean  basis  of  bargain 
and  sale,  without  paternalism  in  any  form  and 
without  the  intervention  of  any  outside  agency. 

My  experience  teaches  me  that  no  one  rule  or 
system  is  properly  applicable  to  every  indus- 
trial unit  but  that  a  method  can  always  be 
worked  out  provided  the  situation  is  scien- 
tifically studied  and  digested. 

The  principles  do  not  change;  the  applica- 
tions always  change.  It  is  the  principles  which 
are  most  important.  In  the  within  pages  I  have 
developed  the  principles  from  experience  and 
then  given  a  number  of  specific  cases  of  their 
entirely  successful  application. 

Most  of  the  chapters  herein  have  previously 
appeared  in  pamphlet  form  and  they  have  been 
correlated  in  a  book  because  the  demand  for  the 
pamphlets  seemed  to  indicate  a  very  general 
approval  of  my  thought. 

William  R.  Basset. 


CONTENTS 

CHAPTER  PAGE 

I     The  New  Basis  of  Industry  ....       3 

II     Skillful    Management     vs.     Welfare 

Work 28 

III  Have  We  Reached  the  Limit  of  Wages  ?    52 

IV  Harnessing  the  Creative  Instinct   .      .     76 
V    Making  the  Workman  Proud  of  His  Job    95 

VI  When  the  Workmen  Help  to  Manage  .  116 

VII  Providing  Steady  Jobs  for  Your  Men    .  138 

VIII  Preserving  the  Wage  System      .     .      .  156 

IX  Why  Profit-Sharing  Fails    ....  176 

X    Striking  the  Balance  Between  Capital 

and  Labor 198 

XI    The  System  of  Representation  .     .     .  219 

XII    In  Conclusion 244 


WHEN  THE  WORKMEN  HELP 
YOU  MANAGE 


WHEN  THE  WORKMEN  HELP 
YOU  MANAGE 

CHAPTER  I 

THE    NEW    BASIS    OF    INDUSTRY 

OuE  big  problem  to-day  is  the  fitting  together 
of  employer  and  employee  upon  a  new  basis  of 
complete  cooperation,  so  that  industry  may 
realize  its  possibilities  and  its  participants  may 
each  have  a  fair  share  of  present  profit  and 
future  opportunity.  Upon  the  human  factor 
hangs  the  future  of  American  industry. 

Charles  M.  Schwab  has  given  public  warning; 
so  has  Edward  A.  Filene.  Our  groat  bankers 
have  sensed  the  new  order  more  quickly  than  the 
strictly  industrial  men ;  Charles  H.  Sabin,  presi- 
dent of  the  Guaranty  Trust  Company  of  New 
York,  said  in  an  interview  for  Forbes' s  Maga- 
zine : 

''The  game  of  life  will  be  played  differently. 
.  .  .  There  will  be  a  levelling  process ;  workers 
will  demand  and  receive  a  larger  share  of  the 

3 


4    When  the  Workmen  Help  You  Manage 

comforts  and  good  things  of  life.  ...  To  my 
mind,  it  is  only  fair  that  our  laboring  people, 
our  artisans,  our  farmers,  and  our  small  busi- 
ness men  should  receive  an  increasing  share  of 
the  good  things  of  life.  ...  In  the  interest  of 
these  very  people,  entirely  apart  from  what  is 
usually  called  the  capitalistic  class,  it  is  highly 
essential  that  the  changes  which  bring  about 
these  desirable  results  be  rightly  guided  and 
that  they  proceed  along  sound  economic  lines. 
Otherwise  we  shall  have  revolution,  anarchy, 
and  loss  and  suffering  all  along  the  line  without 
compensation  to  any  one." 

The  Guaranty  Trust  Company  is  the  second 
largest  financial  institution  in  the  country,  and 
its  president  is  not  an  iconoclast.  He  has  seen 
the  rise  of  the  Labor  party  in  England,  the  vast 
increase  in  the  importance  of  labor  unions  in 
this  country  (an  increase  now  at  a  point  where, 
if  the  unions  become  political  and  fuse  with  the 
Socialists,  they  will  hold  the  balance  of  pov.  cr), 
and  the  general  world  trend  toward  democracy. 

The  vast  movement  that  began  in  Russia  and 
there  reached  such  absurd  lengths,  reaches  all 
over  the  world.  There  is  a  stirring  everywhere 
of  the  worker ;  it  springs  from  an  initial  desire 
on  his  part  to  have  recognition.  But,  once 
started,  it  quickly  topples  over  into  a  desire  to 


The  New  Basis  of  Industry  6 

rule  to  the  exclusion  of  all  other  classes.  And 
to  any  one  who  has  made  a  long  and  close  study 
of  labor  in  industry  it  must  be  apparent  that 
our  own  industrial  relations  are  not  in  such 
form,  nor  are  the  employers  mentally  prepared, 
to  meet  the  changing  point  of  view  of  the  work- 
man. 

I  heard  a  fairly  large  employer  remark  at  the 
close  of  the  war:  ''The  boys  will  come  back 
from  France  thoroughly  disciplined  and  ready 
to  work.  The  work  here  will  seem  easy  after 
what  they  have  gone  through,  and  their  disci- 
pline will  make  them  ready  and  willing  to  take 
orders.     We  shall  have  no  more  strikes." 

That  man  was  living  in  yesterday;  he  be- 
longed to  that  class  who  clamor  for  wages  to  be 
reduced  and  industry  to  go  back  to  the  old  basis 
of  ''hiring  and  firing"  wherein  the  owner  is  the 
exclusive  boss  and  the  worker  is  supposed  to  be 
glad  to  be  alive.  The  delusion  would  be  amus- 
ing were  it  not  likely  to  result  so  seriously  for 
many  creditors  and  stockholders;  for  the  busi- 
ness that  preserves  those  tenets  will  be  able,  at 
the  best,  to  survive  only  a  few  stormy  years. 

These  two  propositions  can  be  taken  as  abso- 
lute: 

(1)  If  wages  are  unnaturally  depressed  re- 
gardless of  the  cost  of  living,  we  shall  have  a 


6    When  the  Workmen  Help  You  Manage 

series  of  anarchistic  strikes — regular  Bolshevik 
class  wars — that  will  paralyze  industry  and  per- 
haps destroy  it. 

(2)  If  there  is  a  period  approaching  that  of 
1914,  when  hundreds  of  thousands  were  unem- 
ployed, state  socialism  will  come  in  at  once,  and 
the  state  will  have  to  support  the  unemployed. 

In  either  event,  both  the  employers  and  the 
employees  will  lose.  But  there  is  a  clear  way 
ahead  if  the  industries  provide  themselves  with 
markets  that  will  absorb  full  time  during  twelve 
months  of  the  year,  and  so  arrange  work  and 
wages  that  every  man  will  have  a  chance  to 
express  himself  in  his  work  and  to  earn  wages 
that  not  only  satisfy  him  according  to  his  abil- 
ity, but  that  also  promise  material  increases 
without  end  as  he  progresses  in  ability. 

Full-time  production  and  working  relations 
satisfactory  to  all  parties  are  to  be  had  by  those 
who,  with  open  minds,  seek  them.  They  are  not 
among  the  impossibilities.  But  to  attain  them 
we  must  discard  many  old  ideas  and  go  forward 
with  open  minds. 

The  solution  of  the  labor  problem  is  not  a 
thing  by  itself,  but  reaches  into  every  branch  of 
an  industry.  The  variety  and  complementary 
natures  of  the  lines  made,  the  overcoming  of 
seasonal  production,  the  extension  into  foreign 


The  New  Basis  of  Indiistry  7 

and  other  markets,  all  may  be  forced  upon  the 
owner  by  the  single  consideration  of  procuring 
and  keeping  together  a  stable  human  institution 
throughout  the  year. 

There  are  some  great  lessons  which  the  war 
has  taught  us  with  respect  to  workmen.  The 
first  is  that  money  alone  will  not  hold  men.  The 
factories  paying  the  highest  wages  had  excep- 
tionally large  turnovers ;  a  steel  plant  that  paid 
high  wages  and  large  bonuses  had  nearly  the 
largest  turnover  in  the  country;  the  shipyards 
paid  well ;  but  in  the  largest  of  them,  in  spite  of 
all  the  well-known  "labor  methods"  being  in 
force,  the  workers  came  and  went  so  rapidly 
that  a  foreman  seldom  knew  who  would  work 
for  him  on  any  day.  A  teacher  of  riveters  in 
this  plant  said  in  despair  that  he  no  sooner  had 
a  man  well  taught  than  he  left. 

We  have  also  learned  that  speeding  up  neither 
helps  production  in  the  long  run  nor  holds  men. 
The  riveters  of  the  Emergenc}^  Fleet  Corpora- 
tion, spurred  on  by  Mr.  Schwab's  personality 
and  the  offers  of  rewards,  made  startling  rec- 
ords for  a  time ;  but  then  they  fell  back  and  the 
average  dropped  even  below  a  rather  low  stand- 
ard. The  spurts  had  reactions  which  showed 
that  they  did  not  pay. 

I  have  noticed  this  in  every  branch  of  indus- 


8    When  the  Workmen  Help  You  Manage 

tiy — you  can  speed  men  up  for  a  time,  but  the 
steady  worker  will  eventually  prove  more  valu- 
able than  the  man  who  can  only  spurt ;  that  man 
will  either  lay  off  altogether  when  his  spurt  is 
done  or  he  will  relax  to  subnormal  for  weeks. 

We  have  also  learned — and  this  is  most  im- 
portant— that  pride  in  work  will  do  more  than 
employment  ''methods"  or  pampering;  in  those 
shops  possessing  a  feeling  that  employer  and 
employee  were  all  one  in  working  for  the  win- 
ning of  the  war  and  there  was  no  suspicion  of 
undue  profits  on  the  part  of  the  employer,  the 
labor  turnovers  were  comparatively  small  and 
the  production  per  man  comparatively  large. 

This  yearning  for  recognition  of  work,  for 
recognition  of  the  dignity  of  labor  in  terms 
other  than  money,  is  further  shown  by  the  prog- 
ress of  strikes.  Formerly  most  of  the  strikes 
were  on  the  subject  of  wages,  because  wages  are 
the  easiest  way  of  expressing  dissatisfaction — 
money  is  the  supposed  universal  cure-all.  But 
when  the  workers  got  all  the  money  they  could 
ask  for,  they  began  to  strike  for  union  recogni- 
tion— and  union  recognition  is  only  another  way 
of  asserting  independence ;  of  saying  that  they 
desire  a  place  in  industry  equal  in  dignity  to 
that  of  the  employer,  that  they  want  a  recog- 
nized   position.     Broadly    viewed,    the    whole 


The  New  Basis  of  Industry  9 

union  movement  is  a  struggle  to  obtain  a  recog- 
nized place  in  society. 

We  are  apt  to  forget  what  unions  are,  because 
of  the  attitude  of  the  business  agents  and  the 
demagogues  who  do  so  much  to  obscure  the  real 
purpose  of  unionism.  The  unions  have  had  a 
hard  battle,  and,  like  individuals  with  a  sense  of 
insecurity  in  their  social  positions,  they  are 
prone  to  overdo  things.  But  unionism  really 
arose  as  a  protest  on  the  part  of  the  workmen 
in  mass  against  the  loss  in  dignity  of  labor  that 
the  introduction  of  steam  and  the  division  of 
labor  caused. 

The  movement  is  a  perfectly  natural  one,  and, 
though  it  often  does  and  often  will  take  wrong 
tacks  and  be  destructive  instead  of  construc- 
tive, the  true  orientation  will  obtain  when  the 
worker  does  find  his  true  position  of  dignity. 
The  employer  did  not  take  away  that  position  in 
the  first  instance,  but  he  can  remodel  industry 
to  restore  it — not  by  going  backward  but  by 
going  forward.  The  unions  are  results  and  not 
causes,  and  they  will,  willy-nilly,  become  en- 
tirely constructive  once  the  causes  that  brought 
them  into  being  are  removed.  This  is  clearly 
shown  by  the  inability  of  the  unions'  leaders  to 
control  their  men  after  all  ordinary  demands 
have  been  met.     Then  they  strike  simply  out  of 


10     When  the  Workmen  Help  You  Manage 

dissatisfaction  with  work  and  usually  without 
knowing  why  they  are  dissatisfied.  Employers 
attribute  their  actions  to  pure  "cussedness." 

The  Government  and  the  union  leaders  sol- 
emnly, and  with  entire  good  faith  on  both  sides, 
covenanted  in  1917  to  preserve  the  pre-war 
status  of  industry  for  the  period  of  the  war. 
They  did  not  preserve  it ;  there  were  more  than 
three  thousand  strikes  during  the  war,  and  there 
are  going  to  be  more.  The  basic  eight-hour  day 
has  been  generally  established.  Most  of  the 
employers  who  used  to  be  at  war  with  the  unions 
have  made  their  peace  or  have  seen  their  prop- 
erties taken  over  by  the  Government.  Prac- 
tically all  of  the  old  differences  between  labor 
and  capital — that  is,  hours  and  wages — were 
settled  for  the  time  being  on  government  work. 
On  top  of  big  wage  increases  many,  perhaps 
most,  employers,  of  their  own  free  will,  put  in 
bonus  systems,  profit-sharing  schemes,  or  other 
devices  to  stimulate  production  and  interest. 
And  up  to  date  only  a  small  percentage  of  the 
plans  based  solely  upon  giving  the  worker  more 
money  for  his  labor  has  increased  his  interest  or 
quieted  his  boiling  discontent.  None  of  the 
plans  will  permanently  quiet  him.  One  of  the 
largest  employers  said : 

''We  can  make  all  the  agreements  that  we 


The  New  Basis  of  Industry  11 

want  to  have  a  labor  peace ;  if  we  make  enough, 
of  these  agreements  we  may  accentuate  the 
white  paper  shortage — and  nothing  more.  We 
are  simply  agreeing  that  natural  forces  shall 
cease.    We  are  just  baying  at  the  moon." 

President  Wilson's  Mediation  Commission, 
after  making  an  intelligent  study  of  conditions 
in  a  fairly  large  number  of  localities,  reached 
the  conclusion  that  industrial  unrest  is  prima- 
rily due  to  the  lack  of  a  healthy  understanding 
between  the  parties  to  industry — between  the 
employer  and  the  employee.  That  there  is  no 
general  understanding  is  due  to  several  causes. 

There  are  few  American  workmen.  It  is  rare 
indeed  to  find  a  native-born  American  at  a  ma- 
chine in  a  big  industrial  plant.  We  find  the 
American-born  on  farms,  in  offices,  acting  as 
foremen  or  superintendents,  or  engaged  in  a 
small  way  in  individual  enterprises.  Mr.  Gom- 
pers,  the  President  of  the  American  Federation 
of  Labor  and  the  leader  of  laboring  men  gen- 
erally, was  born  in  England.  Even  the  first 
generation  of  the  immigrant  prefers  the  white 
collar.  A  member  of  a  draft  board  during  the 
war  commented  on  the  fact  that  the  registrants 
who  were  foreign  born  commonly  had  trades, 
but  that  the  American  born  were  clerks. 

The  American  workman  is  a  political  myth. 


12     When  the  Workmen  Help  You  Manage 

He  is  as  rare  as  the  allegorical  figure  marching 
bravely  to  work  wearing  a  square  cardboard 
cap  and  carrying  a  full  dinner-pail.  The  big 
majority  of  the  workers  are  American  citizens, 
but  a  very  considerable  portion  of  them  do  not 
speak  English.  They  are,  generally  speaking, 
loyal,  but  in  a  Platonic,  international  way. 
There  are  other  things  in  their  lives  that  mean 
more  to  them  than  being  Americans. 

The  American  with  a  public-school  education 
left  industry  because  being  a  workman  is  no 
longer  dignified.  Steam  and  subdivision  of 
labor  changed  the  status.  A  machine  used  to  be 
a  tool  in  the  hands  of  a  man ;  now  the  man  is  an 
assistant  to  a  machine.  The  Taylor  System 
of  Scientific  Management  aims  so  to  symphonize 
the  machine  and  the  man  that  the  man  will  be  as 
dependable  and  automatic  as  the  machine. 

Take  a  machinist.  The  machinist  used  to  be 
an  all-round  man  who  could  use  a  lathe  or  a 
drill-press,  or  do  practically  anything  in  metal. 
Give  him  time  enough  and  he  could  build  a  loco- 
motive or  a  ship.  If  he  was  working  for  any 
one,  he  had  always  before  him  the  opportunity 
to  start  a  little  machine-shop  of  his  own.  But 
to-day,  outside  of  tool-  and  die-makers  and  re- 
pair men,  there  are  few  machinists.  No  one 
man  builds  all  or  even  the  smallest  part  of  an 


The  New  Bads  of  Industry  18 

automobile.  Instead  of  general  machinists,  one 
finds  a  series  of  skilled  machine  assistants,  men 
who  semi-automatically  feed  in  bits  of  metal. 
What  is  the  result?  These  men  lose  their  indi- 
viduality. They  can  not  work  alone ;  they  must 
work  in  conjunction  with  a  machine. 

Being  an  assistant  to  a  machine  is  not  a  posi- 
tion of  particular  interest.  American  boys  do 
not  take  to  it.  But  this  did  not  make  much  dif- 
ference as  long  as  there  were  plenty  of  foreign- 
ers streaming  into  the  country,  ready  to  do  any- 
thing. 

The  machine  was,  for  the  time,  paramount,  and 
the  idea  was  to  have  enough  machines  so  that 
production  might  go  along  almost  without  hu- 
man aid.  The  machines  were  supposed  to  turn 
out  so  much  a  day,  but  they  did  not  do  it;  also 
a  deal  of  imperfect  work  came  through. 

One  day  a  factory-owner  awoke  to  the  acute 
realization  that  men  were  important;  that  it 
was  just  as  essential  to  have  good  men  as  good 
machines ;  that,  although  some  machines  might 
be  automatic,  a  factory  was  not.  He  began  to 
reckon  with  the  human  element.  It  was  then 
that  we  began  to  hear  of  labor  turnover — that 
is,  the  number  of  men  who  are  hired  each  year 
in  order  to  maintain  a  definite  working  force. 

Nobody  had  kept  any  statistics.    When  these 


14     When  the  Workmen  Help  You  Manage 

were  kept  they  were  illuminative.  Some  estab- 
lishments discovered  that  they  were  hiring  three 
thousand  people  a  year  in  order  to  maintain  an 
average  working  force  of  a  thousand.  They 
further  discovered  that  it  cost  money  to  break 
in  new  people ;  that  when  a  man  left  or  was  fired 
his  employer  lost  from  thirty  dollars  to  five 
hundred  because  it  cost  that  much  to  break  in  a 
new  operator,  American  industry  produced 
only  a  fraction  of  its  potential  output  solely  be- 
cause workers  would  not  stay  on  the  job. 

Long-headed  employers  were  quick  to  recog- 
nize that  the  worker  as  a  human  machine  had 
scarcely  more  interest  in  the  product  than  had 
the  inanimate  machine.  Some  thought  that  the 
interest  might  be  held  by  money,  and  therefore 
they  paid  men,  not  for  the  time  they  spent  in 
the  factory,  but  for  the  work  that  they  did — by 
the  number  of  pieces  turned  out — or  else  they 
provided  some  other  kind  of  a  wage  incentive. 
Others  tried  to  draw  interest,  if  not  to  the  fac- 
tory then  about  the  factory,  by  providing  better 
living  conditions,  recreational  opportunities, 
medical  assistance,  and  a  great  number  of  other 
things  that  go  under  the  general  head  of  ''wel- 
fare work."  Judge  Gary,  the  chief  executive 
of  the  United  States  Steel  Corporation,  noted 


The  New  Basis  of  Industry  15 

the  changing  conditions,  and  he  stated  this  prin- 
ciple : 

' '  There  is  no  way  of  permanently  settling  any 
great  question  involving  the  welfare  of  human- 
kind except  on  the  basis  of  right  and  justice." 

He  felt  that  if  he  could  not  interest  the  work- 
ers in  the  work,  still  he  might  interest  them  in 
the  results,  as  partners.  He  evolved  a  stock- 
purchasing  plan  for  employees  back  in  1903. 
To-day  employees  of  the  Steel  Corporation  hold 
stock  to  the  value  of  nearly  nine  million  dollars. 
Many  other  employers  followed  the  lead. 

Such  profit-sharing  is  splendid  in  conception ; 
it  is  the  thought  of  the  employer  and  employee 
working  together  on  the  job  and  sharing  the 
fruits  of  good  work.  But  a  large  corporation 
does  not  arrive  at  its  profits  by  any  such  direct 
method;  their  calculation  is  very  complex,  and 
many  factors,  over  most  of  which  the  worker 
has  no  control,  enter  into  their  make-up.  The 
eventual  connection  between  the  day's  work  and 
the  year's  dividends  is  even  less  dramatic  than 
the  relation  between  the  tax  stamp  on  a  package 
of  tobacco  and  the  coupon  on  a  Liberty  Bond. 

In  addition,  the  average  workman  can  not  buy 
enough  stock  to  make  the  dividends  an  impor- 
tant part  of  the  year's  income,  and,  even  if  it 


16     When  the  Workmen  Help  You  Manage 

were  large  enough,  it  is  doubtful  if  the  worker 
who  grasped  finance  sufficiently  to  understand 
dividends  would  long  remain  a  worker.  The 
purchase  of  stock  by  workers  is  splendid  as  a 
thrift  movement  which  will  encourage  fore- 
handed views  on  life,  but  it  has  nothing  to  do 
with  the  day's  work  or  with  a  real  proprietary 
interest  in  an  employee 's  work. 

Moreover,  the  stock-purchasing  plan  for 
workers  does  not  make  for  the  democratic  inter- 
est, because  the  workers,  as  such,  are  rarely 
represented  on  the  Board  of  Directors  which 
determines  the  expediency  of  dividends.  It  is 
not  easy  to  explain  the  passing  or  cutting  of 
dividends  to  the  ordinary  investing  stockholder, 
but  human  expression  has  not  yet  reached  the 
point  where  such  action  can  be  made  clear  to 
the  worker  who  has  done  his  work  well  and 
bought  his  stock  with  the  fixed  idea  that  it  would 
return  more  interest  than  the  savings  bank. 

As  yet  I  know  of  no  corporation — at  least,  of 
any  size — in  which  the  majority  of  the  stock  or 
even  a  '* working  majority"  is  held  by  the  em- 
ployees. 

Companies  that  did  not  care  to  risk  the  pass- 
ing of  stock  control,  and  feeling  that  anyhow 
the  employees  were  mainly  interested  in  money, 
have   evolved  profit-sharing  plans — by   which 


The  New  Basis  of  Industry  17 

a  percentage  of  earnings  was  distributed  pro 
rata  to  the  men  on  the  pay-roll. 

Welfare  work,  stock  ownership,  profit-sharing 
— all  are  in  the  way  of  sharing  the  fruits  of  in- 
dustry with  the  worker  in  order  to  attract  and 
hold  his  interest  and  thus  gain  his  cooperation. 
But  they  have  not  accomplished  all  the  results 
that  were  hoped  for.  Welfare  work  has  been 
confused  with  ''uplift,"  and  workers — in  com- 
mon with  most  other  people — bitterly  resent  be- 
ing ' '  uplifted ' '  by  main  force.  The  profit-shar- 
ing plans  have  the  objection  that  workers  gener- 
ally do  not  understand  the  process  by  which 
profits  are  made  and  do  not  connect  them  with 
the  actual  work  that  they  happen  to  be  doing. 
The  bonus  payments  for  work  accomplished  do 
stimulate  production,  but  at  the  same  time  they 
transfer  the  interest  from  the  work  to  the 
money,  and  a  man  is  apt  to  consider  that  only 
the  amount  of  work  is  important  and  not  the 
quality.  None  of  these  plans  has  yet  touched 
the  real  point  at  issue — the  changing  of  the 
status  of  the  worker  so  that  he  can  express  indi- 
viduality and  thus  have  the  same  sort  of  interest 
as  he  would  have  if  he  were  working  for  himself. 

The  American  worker — the  old-time  mechanic 
— ^passed  from  big  business  quickly;  the  for- 
eigner, glad  to  gain  a  livelihood,  accepted  the 


18     When  the  Workmen  Help  You  Manage 

oonditions  without  question  as  long  as  he  re- 
tained his  old-world  ideals;  but  now  he  too  is 
asking  for  something  more  than  work  and 
wages.  The  urge  for  a  position,  for  a  job  as  an 
intelligent  human  being,  is  wholly  natural  when 
one  analyzes  the  course  of  industrial  progress. 
To  work  day  in  and  day  out  without  interest,  to 
gain  only  a  sustenance,  is  not  living;  having  had 
a  taste  of  better  things,  the  workers  now  want 
more  of  them — to  acquire  something  of  the 
status  of  employers. 

The  British  Labor  party  has  expressed  its 
desire  for  recognition  in  its  now  celebrated  plat- 
form, a  copy  of  which  should  be  in  the  hands  of 
every  American  employer : 

''"What  the  Labor  Party  looks  to  is  a  genu- 
inely scientific  reorganization  of  the  nation's 
industry,  no  longer  deflected  by  individual  profi- 
teering, on  the  basis  of  the  common  ownership 
of  the  means  of  production ;  the  equitable  shar- 
ing of  the  proceeds  among  all  those  who  partici- 
pate in  any  capacity,  and  only  among  these ;  and 
the  adoption,  in  particular  services  and  occupa- 
tions, of  those  systems  and  methods  of  adminis- 
tration and  control  that  may  be  found,  in  prac- 
tice, best  to  promote  the  public  interest.'' 

A  very  few  years  ago — in  fact,  at  any  time 
before  the  war — talk  such  as  the  above  would 


The  Netv  Basis  of  Industry  19 

have  been  dismissed  as  visionary  and  socialistic. 
But  we  have  seen  our  own  country  go,  for  the 
purposes  of  war,  upon  a  basis  of  socialism. 
The  public  control  of  prices  and  financing,  the 
taking  over  of  the  means  of  communication,  and 
the  heavy  taxation  are  all  socialistic  in  the  ex- 
treme. They  amount  to  a  national  pooling  of 
lives  and  property — the  rights  of  individuals 
cease  to  be  paramount  and  give  way  to  the  right 
of  the  nation.  What  we  should  have  thought 
socialistic  in  1914  is  now  commonplace ;  we  are 
adopting  socialistic  principles  in  business  every 
day,  though  divorcing  them  from  the  name  of 
socialism. 

The  American  worker  is  not  socialistic  in  the 
same  sense  as  the  European.  The  American 
Federation  of  Labor  is  against  socialism  as 
such,  but  it  does  stand,  and  with  it  most  of  the 
unaffiliated  workers,  for  many  of  the  principles 
set  forth  in  the  program  of  the  British  Labor 
party,  which  is  frankly  socialistic. 

The  aims  of  neither  the  British  nor  the  Amer- 
ican labor  people  end  with  wages,  working  con- 
ditions, and  hours.  They  embrace  complete  so- 
cial programs  which  will  give  the  worker  an 
opportunity  to  express  his  individuality.  The 
fear  of  the  employer  is  that  this  expression  will 
mean  the  suppression  of  profitable  industry. 


20     When  the  Workmen  Help  You  Manage 

Should  not  the  employer,  on  the  contrary,  wel- 
come any  change  in  the  industrial  relation? 
For  will  not  the  advantages  to  be  gained 
through  cooperation  of  the  human  element  be  so 
great  as  to  overcome  the  undoubtedly  higher 
costs  in  other  directions  ? 

American  employers  everywhere  recognize 
that  their  relations  with  labor  are  not  satisfac- 
tory. It  is  trite  to  say  that  the  human  waste  is 
the  greatest  of  all.  The  unthinking  blame  that 
condition  on  labor;  the  thinking  look  over  their 
own  houses  to  see  if  the  difficulties  may  not  be 
mutual.  I  have  generally  found  that  the 
troubles  are  of  mutual  origin — although  in  the 
larger  establishments  neither  employer  nor  em- 
ployee could  put  his  finger  upon  the  origin. 
For  instance,  most  piece  rates  are  unscientifi- 
cally fixed  and  compensate  without  an  exact 
regard  for  the  labor  expended.  Rates  that  are 
too  high  or  rates  that  are  too  low  lead  alike  to 
dissatisfaction ;  for  the  worker  will  loaf  to  cover 
up  the  high  rates  or  grumble  at  the  amount  of 
work  he  must  do  with  the  low  rates;  in  both 
cases  his  sense  of  fairness  is  hurt. 

I  recall  a  factory  where  the  labor  turnover 
was  abnormally  high.  The  figures  showed  that 
just  two  departments  were  above  normal;  and 
they  were  so  high  as  to  affect  the  rate  for  the 


TJie  New  Basis  of  Industry  21 

whole  plant.  The  men  who  quit  those  depart- 
ments said  without  exception  that  they  left  be- 
cause the  foremen  were  fond  of  petty  tyrannies. 
The  foreman  or  superintendent  who  has  risen 
from  the  ranks  is  always  the  hardest  man  to 
work  for,  and  in  these  cases  they  had  taken 
great  delight  in  hazing  men  on  the  slightest 
offense. 

These  conditions  had  not  been  known  to  the 
management,  and  the  result  was  that  an  ex- 
tremely fair-minded  owner  had  been  blamed  for 
injustices  in  which  he  had  no  part  and  which 
were  quite  foreign  to  his  nature.  When  those 
foremen  were  removed,  the  labor  turnover 
dropped,  and  consequently  the  costs  of  produc- 
tion. For  it  had  been  the  high  cost  of  produc- 
tion that  had  drawn  attention  to  the  labor  turn- 
over. 

In  another  shop  a  department  was  abnor- 
mally low  in  its  production,  or,  to  put  it  another 
way,  abnormally  high  in  its  cost.  A  study  of 
conditions  showed  that  the  men  were  giving 
forth  only  a  fraction  of  their  effort  and  spent  a 
deal  of  time  in  bickering  among  themselves.  It 
developed  that  they  were  of  several  races,  reli- 
gions, and  politics,  and  they  carried  these  differ- 
ences into  the  shop.  The  solution  was  to  sepa- 
rate them  into  gangs  of  approximately  similar 


22     When  the  Workmen  Help  You  Manage 

tastes ;  and  by  such  a  simple  adjustment  the  pro- 
duction increased  nearly  fifty  per  cent. 

I  have  given  these  cases  only  to  demonstrate 
how  much  it  matters  whether  the  men  are  happy 
or  dissatisfied — that  a  man  is  not  simply  a 
"hand,"  but  a  human  being,  and  that  it  is  money 
out  of  pocket  to  consider  labor  as  a  collection  of 
individuals  who  can  be  hired  and  fired,  jumbled 
together,  or  otherwise  treated  much  the  same  as 
low-grade,  non-perishable  merchandise. 

On  the  other  hand,  it  is  just  about  as  wasteful 
to  treat  the  workingman  as  if  he  were  some 
especially  fine  merchandise,  to  be  kept  in  show- 
cases and  carefully  dusted  from  time  to  time — 
which  seems  to  be  the  object  of  welfare  work  of 
the  paternal  order.  A  worker  does  not  appre- 
ciate having  his  affairs  ordered  for  him ;  that  is 
a  sacrifice  of  independence,  and  the  result  is 
harmful,  no  matter  how  good  an  employer 's  in- 
tentions may  be.  There  should  be  no  confusing 
of  charity  and  business,  and  there  need  be  none. 

If  we  take  medical  inspection  and  clean,  safe 
shops  as  simply  good  business,  both  from  the 
standpoint  of  the  compensation  laws  and  of  pro- 
duction, they  are  welcomed  by  the  men.  In- 
creased educational  facilities  and  the  like  are 
also  welcomed,  although  it  is  an  open  question 
whether,  except  for  special  training,  efforts  in 


The  New  Basis  of  Industry  23 

this  direction  are  not  better  made  with  the  whole 
community  rather  than  the  company  in  view. 
But  the  'taking  an  interest"  kind  of  welfare, 
the  welfare  work  that  presupposes  that  the  la- 
boring man  is  a  fallen  animal  and  should  be 
uplifted,  is  everywhere  productive  of  more 
harm  than  good;  if  it  is  not  resented,  it  is  be- 
cause the  working  force  has  become  docile.  No 
live  employer  wants  a  time-serving,  docile 
force.  The  will  to  cause  trouble  is  exactly  the 
will  which,  exerted  constructively,  makes  for 
success. 

In  all  of  the  above  I  have  taken  the  worker  as 
an  impersonal  being,  or  a  personal  being  crav- 
ing creature  comforts  alone,  and  the  employer 
as  representing  capital  and  seeking  to  develop 
it  by  the  hired  services  of  the  worker.  I  have 
taken  that  view  because  it  is  the  usual  one,  and 
because  it  serves  to  illustrate  that  the  real  dif- 
ference between  employer  and  employee  is  in 
point  of  view.  If  they  can  have  the  same  point 
of  view  they  can  both  work  for  success  in  the 
same  establishment  and  along  exactly  the  same 
lines,  and  each  receive  the  proper  mental  and 
financial  nourishment  for  ambition.  We  can 
solve  our  problems  by  discarding  money  as  the 
universal  common  denominator  and  replacing  it 
with  natural  expression  of  instinctive  desires — 


24     When  the  Workmen  Help  You  Manage 

that  is,  by  bringing  in  a  measure  of  democracy 
to  replace  autocracy. 

Let  me  explain.  I  have  found  that  workers 
can  not  be  held  at  monotonous  work  which  they 
do  not  understand;  no  amount  of  money  will 
keep  active-minded  men  for  any  length  of  time  at 
such  tasks  if  any  opportunity  elsewhere  offers. 
And  it  is  active-minded  men  who  are  needed. 
Under  the  German  system  the  workers  are  mere 
automatons  with  direction  from  above.  The  re- 
pressive influences  of  this  system  are  shown  by 
the  fact  that  the  German  nation  has,  since  the 
system  got  under  way,  contributed  practically 
no  new  ideas  to  manufacture  or  science.  Ger- 
mans have  taken  the  initiative  away  from  the 
many,  put  it  among  the  few,  and  as  a  result  their 
industries  have  generated  no  new  thoughts. 
German  practice,  except  in  things  military,  has 
been  taken  from  other  countries.  Germany 
simply  dammed  up  the  initiative  of  the  people. 
Have  our  industrial  processes  been  tending  to- 
ward the  same  ideals — toward  the  submissive 
rather  than  the  independent  workman? 

Every  employer  knows  that  he  could  not  for 
long  be  prosperous  if  he  repressed  or  had  re- 
pressed every  desire  to  put  himself  into  his 
business.  He  does  not  care  how  long  he  works, 
if  only  he  can  have  the  satisfaction  of  seeing 


The  New  Basis  of  Industry  25 

his  desires  bear  fruit.  The  workingman  has 
exactly  these  same  desires,  and  if  they  can  not 
find  expression  in  making  his  own  job  better, 
they  will  break  out  in  some  other  form.  The 
energy  and  brains  that  might  as  well  go  into 
business  for  the  betterment  of  all  may  find  a 
destructive  outlet  inside  or  outside  the  plant. 
The  whole  movement  for  democracy  throughout 
the  world  is  only  an  effort  to  express  desires — 
desires  that  every  one  of  us  has  in  some  form 
or  other. 

Directors  of  industry  have  two  courses  before 
them:  they  can  fight  the  desire  of  the  working- 
man  for  recognition  and  representation  on  an 
equal  plane  as  a  component  part  of  industry,  or 
they  can  all  combine  to  hitch  their  desires  in 
double  harness  and  put  into  business  the  will 
and  brain  of  every  individual — for  every  indi- 
vidual has  a  will  and  brain  even  if  long  disuse 
makes  him  act  as  if  he  had  none. 

But  is  such  expression  practical?  Employ- 
ers are  apt  to  think  of  the  participation  of 
workers  in  the  control  of  industry  as  taking 
something  away,  simply  because  they  are  accus- 
tomed to  think  they  must  always  make  money 
at  the  expense  of  some  one  else.  Yet  it  takes 
only  a  moment's  thought  to  discover  that  profit- 
able business  is  not  built  in  such  fashion,  but  by 


26     When  the  Workmen  Help  You  Manage 

making  or  selling  something  upon  which  others 
can  make  money,  either  through  use  or  resale. 

The  view  of  selling  as  ''sticking"  somebody 
with  something  has  passed  out  except  among 
old-clothes  dealers.  Only  a  few  business  men 
have  realized  that  the  same  rule  holds  true  as 
well  inside  as  outside  of  the  shop,  and  that  the 
most  profitable  manufacturing  is  that  which  re- 
acts in  like  measure  to  the  profit  of  all  who  are 
engaged  in  it. 

Wages,  for  instance,  are  never  absolutely  high 
or  low.  They  are  high  if  they  do  not  return  a 
profit  to  him  who  pays  them;  they  are  low  if 
they  return  too  much  profit.  We  know  that  a 
man  who  throws  himself  into  his  work  as  if  he 
were  doing  it  for  himself  is,  given  skill,  a  good 
investment  at  almost  any  price.  Would  not, 
then,  the  development  of  mutual  work  between 
employer  and  employee  bring  in  so  much  talent 
now  latent,  and  get  rid  of  so  much  of  the  super- 
vision now  thought  necessary  as  to  insure  profit- 
able engagement  for  all  the  parties  to  industry? 

Just  as  an  illustration,  the  British  Labor 
party  insists  in  its  platform  upon  the  centraliza- 
tion and  cheapening  of  electric  power  in  order 
to  eliminate  the  wastes  of  power.  Imagine  pri- 
vate owners  asking  for  such  monopolies!    Yet 


The  New  Basis  of  Industry  27 

that  is  simply  the  thought  of  industrial  engi- 
neering applied  in  a  big  way. 

The  management  that  now  sets  about  giving 
thought  in  a  big  way  to  bringing  out  the  possi- 
bilities of  its  plant  and  human  resources  is  the 
only  management  that  can  survive.  We  are 
just  entering  upon  our  international  career  as 
an  industrial  nation,  and  in  the  world  competi- 
tion our  employers  can  well  begin  to  make  plans 
for  manufacturing  upon  a  mutual  basis  with 
their  employees — of  organizing  in  such  manner 
that  injustice  or  curbing  of  legitimate  expres- 
sion is  impossible.  For  it  is  to  be  remembered 
that,  in  any  war  between  capital  and  labor,  capi- 
tal is  bound  to  lose  even  if  it  gains  a  technical 
victory.  Is  it  wise  to  invite  such  a  war,  when  it 
can  be  avoided  and  both  parties  find  themselves 
better  off  for  their  concessions  ? 


CHAPTEE  II 

SKILFUL   MANAGEMENT   VS.    WELFAEB   WORK 

The  commonest  approach  to  the  labor  prob- 
lem is  from  the  social  angle.  One  sees  every- 
where a  quickening  in  the  activities  of  those 
who  always  look  at  a  human  being  as  something 
to  be  morally  and  physically  bettered,  at  what- 
ever cost — and  made  happy  according  to  rule. 
If  the  individual  does  not  happen  to  attain  hap- 
piness according  to  rule,  that  is  only  the  per- 
versity of  the  individual.  Surrounding  people 
with  good  influences,  and  all  that  sort  of  thing, 
gained  a  wonderful  impetus  during  the  war ;  for 
in  the  massed  soldiery  the  uplifters  had  victims 
who  could  not  get  away :  they  might  squirm,  and 
the  more  degenerate  might  even  curse,  but  they 
could  not  get  away. 

Welfare  work  had  a  large  place  in  the  govern- 
ment employment  undertakings.  The  people 
must  be  taught  to  play,  so  the  theory  ran — and 
not  infrequently  they  learned  more  about  play 
than  work.  A  strong  trend  has  developed, 
through  numerous  amateur  reconstruction  com- 

28 


Skilful  Management  vs.  Welfare  Work     29 

mittees,  to  attempt  to  develop  a  new  social 
structure,  based  not  at  all  upon  giving  eacli  man 
what  lie  is  entitled  to,  but  upon  surrounding 
him,  whether  or  no,  with  the  comforts  of  life — 
to  make  him  contented. 

Somehow,  I  am  reminded  that  the  ideal  fac- 
tory organization,  under  this  concept  of  labor 
organization,  might  be  able  proudly  to  para- 
phrase the  well-known  advertisement  of  ^'rnilk 
from  contented  cows." 

The  present  thought  in  some  quarters  is  that 
the  great  thing  is  to  give  a  man  a  job  and  then 
keep  him  happy. 

Jobs  are  not  ''given."  Without  an  economic 
reason,  they  can  not  exist.  Their  existence  de- 
pends, not  upon  the  good  will  of  the  employer 
or  the  ''happiness"  of  the  employed,  but  upon 
the  continuous  output  of  a  well-made  product 
that  the  public  buys.  Hence,  systems  of  em- 
ployment bureaus  do  not  solve  anything.  By 
making  labor  easily  available  they  put  a  pre- 
mium upon  seasonal  manufacture,  and  in  that 
respect  hinder  the  scientific  development  of 
commercial  activity,  while  at  the  same  time  giv- 
ing encouragement  to  the  worker's  Wanderlust. 

If  you  adopt  the  German  system  of  requiring 
workers  to  carry  cards  on  which  the  employer 
writes  the  man's  qualifications,  and  the  reason 


30     When  the  Workmen  Help  You  Manage 

he  left  or  was  fired  from  a  job,  then  you  get 
somewhere  in  employment  agencies — for  then 
you  can  place  men  who  are  out  of  work  for  a 
good  reason  and  not  merely  because  they  hap- 
pen to  want  a  trip.  But  so  to  stamp  a  man  with 
his  qualifications  is  wholly  un-American.  If 
you  want  to  make  employment  agencies  func- 
tion, you  must  add  to  them  the  highly  objec- 
tionable features  of  a  black-list  for  bad  em- 
ployees and  state  supervision  of  bad  employers. 

In  the  same  objectionable  category  fall  the 
efforts  to  attain  proper  employment  relations 
through  employment  departments  which  keep  a 
record  of  the  health  of  the  workers,  and  see  to 
it  by  periodical  examinations  that  a  fair  aver- 
age of  health  is  maintained — sometimes  by  fir- 
ing the  unhealthy,  or  again  by  nursing  them 
back  to  health.  A  statistical  employment  bu- 
reau in  a  plant  is  a  great  aid;  it  will  show 
whether  a  department  is  having  too  great  a 
labor  turnover,  and  will  thus  prompt  investi- 
gation; and  it  should  also  call  attention  to  the 
real  cost  of  hiring  and  firing  men.  But,  essen- 
tially, such  a  bureau  is  a  post-mortem  affair :  it 
does  not  prevent  the  disease. 

A  nearer  approach  to  constructive  work  is  the 
sorting  of  applicants  in  order  to  get  them  into 
the  right  jobs.     But  the  job  is  more  often  at 


Skilful  Management  vs.  Welfare  Work     31 

fault  than  the  man.  One  can  not  assume  that 
the  job  is  perfect  and  that  the  sole  question  is 
fitting  the  man  to  that  job.  Well-fitted  harness 
does  not  make  a  good  horse,  although  ill-fitting 
harness  may  lose  the  value  of  a  good  horse. 

The  handing  of  a  sop  to  a  worker  is  not  a  new 
idea.  The  present  thought  is  often  to  dull  his 
sensibilities  by  creature  comforts.  The  older 
thought  was  cruder,  although  probably  more  ef- 
ficacious: it  took  the  ground  that  a  man  gave 
less  trouble  if  he  were  continually  soaked,  just 
short  of  the  saturation  point,  with  liquor.  Ben- 
jamin Franklin  somewhere  in  his  writings  tells 
of  how  the  printers  with  whom  he  worked  had 
beer  at  such  short  intervals  during  the  day  that 
they  were  always  slightly  mellow  and  always 
(and  this  was  more  important,  from  the  employ- 
er's view-point)  in  need  of  money  for  more 
drink.  England  would  never  have  been  able  to 
pay  the  wages  that  obtained  in  her  industrial 
districts  had  it  not  been  that  the  people  through 
drink  lost  all  desire  for  better  living.  The 
newer  welfare  work  seeks,  under  various  spe- 
cious guises,  to  dull  pulsating  individuality,  not 
by  drink,  but  by  diversions  of  various  sorts. 

In  the  first  chapter  I  touched  upon  these 
phases;  but  I  am  here  again  parading  them 
because  I  want  to  bring  out  my  point,  that  the 


32     When  the  Workmen  Help  You  Manage 

nice  functioning  of  capital  and  labor  is  not  at 
all  a  social  but  is  instead  a  management  prob- 
lem. Efficient  labor  rests  upon  the  stimulation 
of  the  creative  faculty  through  proper  work  ar- 
rangements; efficient  capital  rests  upon  the 
stimulation  of  the  reproductive  faculty  through 
proper  planning.  The  efficient  functioning  of 
the  two  in  unison  rests  upon  the  steady  balance 
in  adequate  respective  remunerations. 

These  matters  are  managerial  and  not  at  all 
social;  they  connote  interdependence  and  not 
dependence.  As  soon  as  the  interdependent  re- 
lation is  destroyed  and  either  labor  or  capital 
becomes  dependent  the  one  on  the  other,  then  we 
have  an  eleemosynary  condition  which  deadens. 
For  instance,  I  shall  show  in  Chapter  IX  that 
profit-sharing  in  its  ordinary  meaning  is  a  giv- 
ing and  not  a  sharing,  and  hence  it  is  not  to  be 
expected  that  it  will  produce  the  only  results 
that  are  worth  while  in  manufacturing  for 
profit,  or  which  have  in  them  any  iDcrmanency — 
the  more  economical  engagement  of  work  and 
labor,  so  that  sales  prices  may  be  reduced  and 
both  capital  and  labor  benefit. 

The  moneys  that  are  spent  in  gifts,  under  the 
guise  of  profit-sharing,  might  better  be  spent  in 
plant  improvement  or  in  method  bettering,  so 
that  both  the  employees  and  the  employer  may 


Skilful  Management  vs.  Welfare  Work     83 

earn  more.  A  stable  condition  is  the  result  of 
unceasing  progress  in  the  way  of  better  method- 
izing, and  not  in  sitting  down  in  a  circle  and 
dividing  up  what  happens  to  be  in  hand. 

'' Reconstruction"  threatens  to  become  as  re- 
pelling a  word  as  ''efficiency."  Some  one  has 
well  said:  ''The  war  has  carried  us  to  the 
depths;  let  us  build  from  the  depths."  But  in 
the  building  it  is  not  necessary  to  abandon  all 
that  has  gone  before  and  to  treat  the  past  his- 
tory of  industry  as  a  sheet  from  which  the  writ- 
ing has  been  erased.  We  must  subscribe  either 
to  a  balanced  relation  between  capital  and  labor 
or  to  some  such  creed  as  this : 

"The  capitalist  mode  of  production  is  based 
upon  the  divorce  of  the  majority  of  the  people 
from  the  instruments  of  production.  Society  is 
thus  divided  into  two  opposite  classes — the  capi- 
talist and  his  sleeping  partners ;  and  the  work- 
ing class,  possessing  nothing  but  its  labor 
power.  This  social  division  widens  with  every 
advance  in  machinery;  and  while  capital  stead- 
ily accumulates  into  fewer  hands,  there  is  a  con- 
stantly growing  insecurity  of  livelihood  for  the 
majority  of  the  wage-earners,  and  a  steady 
physical  and  mental  deterioration  among  the 
poverty-stricken  of  the  population.  Then  de- 
velops the  class  war." 


34!     When  the  Workmen  Help  You  Manage 

We  must  grant  that  the  interests  of  the  em- 
ployer and  the  employed  are  opposite,  just  as 
the  interests  of  the  buyer  and  seller  are  oppo- 
site. But  here  in  America  we  have  long  since 
got  over  the  old  idea  that  a  sale  is  a  matter  of 
mutual  recrimination.  The  seller  no  longer 
pleads  his  poverty  in  extenuation  of  his  price, 
and  neither  does  the  buyer  consider  it  essential 
to  call  in  the  aid  of  his  pet  anti-cheat  deities. 
The  larger  the  sale  the  easier  it  is  to  arrive  at 
terms.  Turning  to  the  sphere  of  employment, 
one  finds  that  very  high-priced  men  are  hired 
on  a  level  plane;  in  fact,  the  very  highest  sal- 
aries are  arranged  and  paid  with  the  greatest  of 
good  feeling,  although  the  salary  in  question  (as 
wages  in  the  bulk  always  do)  may  exceed  the 
proprietor's  own  earnings  from  the  enterprise. 
Why,  then,  must  it  be  otherwise  when  the  sal- 
ary decreases  into  mere  wage? 

It  need  not  be  otherwise.  Again  taking  a  les- 
son from  merchandising,  we  find  that  the  most 
progressive  sellers  make  it  their  business  to 
see  that  their  buyers  make  money  out  of  what 
they  buy — they  try  to  make  certain  that  there 
will  be  a  mutuality  of  benefit,  even  if  there  can 
not  be  a  mutuality  of  interest.  The  best  sellers 
will  go  to  any  length,  they  will  revamp  all  their 


Skilful  Management  vs.  Welfare  Work     35 

methods,  to  carry  through  the  principle  that 
lasting  trade  depends  upon  mutual  benefit. 

The  salesman  who  ''talks"  any  one  into  buy- 
ing is  no  longer  considered  an  asset;  and  the 
employer  who  hopes  to  get  the  most  economical 
labor  results  by  mere  talking,  and  not  by  a  pol- 
icy of  mutual  benefit,  will  find  himself  without 
good  labor  as  quickly  as  such  a  salesman  will 
find  himself  without  good  customers. 

The  balance  between  the  wages  of  capital  and 
the  wages  of  labor  is  not  static,  but  is  contin- 
ually and  rightfully  in  the  direction  of  reducing 
the  percentage  wage  and  increasing  the  gross. 
The  capitalist  makes  less  per  sale,  but  makes 
more  sales;  the  worker  makes  less  per  article, 
but  makes  more  articles.  Such  is  the  scientific 
method  of  conducting  business.  The  other  and 
more  common  method  is  to  jack  up  wages  and 
the  selling  price  without  any  compensating  effi- 
ciency— which  starts  the  vicious  circle  of  unrest 
by  raising  the  cost  of  living  and  making  what- 
ever wages  are  paid  unsatisfactory. 

The  longer-headed  labor  men  have  seen  that 
wages  can  not  be  put  up  in  real  buying  power  if 
prices  also  go  up,  and  W.  L.  George,  in  what  he 
calls  "Labor's  Armistice  Terms  to  the  Eich,'' 
says: 


36     When  the  Workraen  Help  You  Manage 

"It  is  no  use  settling  strikes  by  tricking  us — 
namely,  by  raising  prices  equally  with  wages; 
our  increases  must  come  off  profit." 

And  another  has  said : 

"Save  he  serve,  no  man  may  rule." 

Mr.  George  is  something  of  a  demagogue  and 
is  aiming  at  the  eventual  destruction  of  capital. 
The  second  quotation  hits  nearer  the  mark — 
that  unless  a  real  service  be  rendered,  the  em- 
ployer-capitalist is  not  entitled  to  direct  his  cap- 
ital. The  service  is  to  the  worker  and  to  the 
public,  and,  lest  it  be  thought  that  I  have  got 
off  the  track  and  am  heading  in  the  direction  of 
business  as  a  philanthropy,  let  me  say  at  once 
that  it  is  in  serving  the  worker  and  the  public 
that  capital  finds  its  greatest  and  most  enduring 
profits. 

It  is,  then,  the  skilful  manoeuvering  of  capital 
that  is  back  of  the  whole  labor  problem.  Which 
is  only  another  way  of  saying  "management" — 
for  management  means  much  more  than  "order- 
ing about."  It  means  the  exact  relating  of  the 
various  parts  of  a  business,  so  that  there  is  no 
waste  of  effort  or  money — that  all  of  the  effort 
and  all  of  the  money  go  into  the  product. 

One  is  apt  to  take  up  labor  as  something  that 
is  apart  from  finance.  There  is  no  obvious  con- 
nection between,  say,  the  credit  department  and 


Skilful  Management  vs.  Welfare  Work     37 

the  foundry.  Yet,  if  the  credit  granting  is  too 
loose,  the  bad  debt  loss  will  be  so  high  that  sal- 
aries and  wages  all  around  must  be  depressed  in 
order  to  meet  competitors  who  do  not  have  ros- 
ters of  bad  debts ;  or,  again,  the  credits  may  be 
too  tight  and  thereby  business  lost  and  the  turn- 
over of  the  capital  slackened,  which  again  finds 
its  reflection  in  the  costs  of  production.  If  the 
whole  organization  is  planned  to  minimize  the 
amount  of  capital  represented  by  goods  in  proc- 
ess and  to  accelerate  the  period  of  turnover, — 
and  such  is  the  plan  of  scientific  business, — then 
any  department  may  be  so  slack  as  to  cause  the 
engagement  of  unnecessary  working  capital  or 
the  prolongation  of  the  period  of  turnover. 

I  have  many  times  found  this  principle  of 
interrelation  neglected  because  the  head  execu- 
tive happened  to  have  been  trained  in  only  one 
side  of  the  business.  If  he  has  worked  up  from 
a  salesman  he  may  think  that  selling  is  the  whole 
thing  and  regard  the  factory  as  a  machine  that 
grinds  out  articles  for  his  people  to  sell ;  if  he 
has  been  brought  up  on  the  factory  side,  he  may 
regard  the  selling  organization  as  a  nuisance 
and  insist  that  customers  take,  not  what  they 
may  want,  but  what  is  easiest  to  manufacture. 

Here  is  an  instance  of  the  salesman-executive 
type.    I  examined  a  certain  plant,   and  was 


38     When  the  Workmen  Help  You  Manage 

struck  by  an  atmosphere  of  extraordinary  slop- 
piness  and  fitfulness.  The  workers  used  their 
hands  and  their  feet,  but  apparently  reserved 
their  heads  for  purposes  other  than  work.  I 
noticed  a  cutting-off  lathe  running  on  heavy 
work.  Near  one  end  was  a  puddle  of  water  and 
a  broken  oil-can,  while  scattered  about  were  sev- 
eral burnt  tools.  The  water  pump  was  not  in 
order,  so  the  operator  used  the  oil  to  prime  it, 
but  before  he  could  get  the  cap  back  a  quantity 
of  water  always  spurted  out  on  the  floor. 
When  the  puddle  of  water  got  too  big,  he  quit 
using  the  pump  for  a  while  and  risked  burning 
the  tools — or  cut  down  the  speed. 

It  was  discovered  by  a  time  study  that  the 
worker  actually  spent  fifteen  per  cent,  of  his 
time  fooling  with  the  pump.  Take  fifteen  per 
cent,  of  that  man's  wage,  add  the  shop  burden, 
and  you  will  have  a  very  fair  annual  sum. 

In  another  part  of  the  shop  was  a  modern 
griuding-machine,  but  it  was  still  in  its  crate, 
and  had  been  there  for  five  months,  because,  as 
the  superintendent  explained:  "We  keep  only 
one  man  busy  about  half  the  time  on  that  sort 
of  work,  and  it  is  no  use  setting  up  the  machine 
until  more  work  comes  along. ' '  There  was  either 
a  loss  of  capital  through  the  purchase  of  a  use- 
less tool,  or  a  waste  of  labor  in  using  a  man  a 


Skilful  Management  vs.  Welfare  Work     S9 

half  day  or  so  on  an  operation  that  should  take 
less  than  that  time. 

In  another  department,  in  a  facing  operation, 
it  was  found  that  the  addition  of  an  inexpensive 
jig  would  not  only  increase  the  output  thirty- 
eight  per  cent.,  but  would  overcome  a  sheer 
waste  of  twenty-five  per  cent,  of  the  forgings 
that  were  regularly  spoiled  in  process  through 
the  faulty  j-ig. 

What  was  the  cause  of  all  this  disorganiza- 
tion, which  not  only  showed  itself  in  bad  work, 
but  also  in  a  high  labor  turnover  and  a  general 
dissatisfaction  with  wages,  to  say  nothing  of 
the  unnece&sarily  high  production  cost? 

Executive  personnel. 

The  president  had  started  as  a  salesman,  then 
had  gone  on  to  sales-manager,  vice-president, 
and  finally  to  chief  executive.  He  knew  nothing 
of  fabrication,  and  intensely  disliked  being 
bothered  with  it;  therefore  he  put  in  a  buifer 
between  himself  and  the  factory  in  the  person  of 
an  assistant  who  had  also  grown  up  through  the 
sales  force  and  who  had  the  same  ideas  as  his 
superior.  He  overruled  the  production  depart- 
ment and  insisted  that  sales  orders  rule.  Eco- 
nomical runs  were  broken  up  to  satisfy  custom- 
ers '  whims  for  specials ;  orders  were  put  aside 
that  samples  might  be  made,  even  though  the 


40     When  the  Workmen  Help  You  Mcmage 

samples  were  not  needed;  materials  were  bor- 
rowed ruthlessly  from  nearly  finished  orders  t-o 
rush  something  through  for  an  especially  fa- 
vored customer,  and  often  the  original  jobs  were 
not  completed  for  months. 

Those  executives  had  no  appreciation  at  all 
of  the  value  of  good  factory  management. 
Hence  they  did  not  get  good  factory  manage- 
ment, and  of  course  they  had  a  very  large  labor 
turnover  and  frequent  strikes.  Whenever  a 
strike  for  higher  wages  or  shorter  hours  came 
on,  the  president,  without  investigation  into  the 
merits,  alwaj^s  showed  a  ''firm  hand,"  He 
railed  at  the  perversity  of  the  men,  and  swore 
that  he  would  see  the  place  ruined  before  he 
submitted  to  extortion.  Then,  as  orders  began 
to  mount  up  and  customers  pressed  for  delivery, 
he  grumbled  with  less  fervor,  and  finally,  when 
the  pressure  from  the  outside  became  unbear- 
able, he  called  in  the  factory  superintendent  and 
told  him  to  make  the  best  compromise  with  the 
men  that  he  could  get.  The  president's  strike 
procedure  never  varied.  He  always  considered 
the  wages  excessive  and  the  demands  unjust, 
but  he  really  never  knew  a  single  figure  of  the 
actual  cost  of  wages.  This  man  did  not  really 
have  a  labor  problem  at  all — although  he  com- 


Skilful  Management  vs.  Welfare  Work     41 

plained  that  he  had:  his  problem  was  purely 
personal. 

Unfortunately,  there  are  not  a  few  such  exec- 
utives all  over  the  world.  Mr.  J.  H.  Thomas, 
commenting  on  the  English  situation,  said: 
**What  has  been  the  course  of  events  during  the 
recent  strikes?  Negotiations  have  taken  place, 
then  a  rupture  has  occurred,  a  strike  has  fol- 
lowed, and  immediately  the  workers  have  ob- 
tained all  they  asked.  Either  they  were  entitled 
to  their  demands  before  they  struck,  or  they  cer- 
tainly were  not  entitled  to  them  after  the  strike. 
You  can  not  govern  the  country  unless  you  are 
firm,  and  you  have  no  right  to  be  firm  before 
you  are  just.  These  continual  capitulations  to 
brute  force  have  resulted  in  the  workers  feeling 
that  the  only  way  to  secure  justice  is  to  strike." 

Take  another  case.  A  factory  was  crowded 
with  orders,  and  the  executives  thought  that 
they  needed  a  large  addition  to  capital  in  order 
to  increase  facilities.  But  they  could  not  get 
the  capital  because  their  earnings  were  low. 
The  workers  were  restless  and  wanted  more 
money,  which,  in  the  state  of  the  earnings,  the 
executives  did  not  see  their  way  clear  to  grant. 
On  examination  of  the  factory,  I  discovered  that 
the  average  capital  turnover  took  eighty  days. 


42     When  the  Workmen  Help  You  Manage 

This  seemed  excessive  in  view  of  the  simplicity 
of  the  operations  and  the  ease  with  which  raw 
materials  might  be  had.  A  careful  system  of 
planning,  which  included  the  elimination  of  use- 
less stocks,  reduced  that  turnover  period  to 
forty-five  days.  The  company  took  on  the  new 
business  and  is  now  earning  twice  the  former 
profit  on  the  same  capital  and  pajdng  satisfac- 
tory wages.  Yet  if  it  had  increased  its  capital 
it  would  probably  have  been  wrecked  by  labor 
troubles. 

Take  still  another  case.  A  knitting-mill  fol- 
lowed the  usual  custom  of  routing  goods  through 
the  factory  in  case  lots  for  customers.  When  a 
lot  arrived  at  the  finished-goods  room,  it  could 
seldom  be  shipped  because  of  the  '^ rejects"; 
then  special  lots  had  to  be  sent  through  the  mill 
to  fill  out  the  order.  In  the  meantime  the  cus- 
tomer fumed  and  the  firm  lost  the  advantage  of 
a  quick  turnover ;  incomplete  orders  often  hung 
up  thirty  days  in  the  shipping-room. 

It  was  a  simple  matter  to  plan  a  stock-room 
program  in  accord  with  the  size  demands  as 
shown  by  the  records,  and  to  fill  orders  on  requi- 
sition from  the  stock-room.  The  production 
was  planned  according  to  those  needs.  That 
company's  labor  troubles  were  readily  traceable 
to  the  needless  loss  in  undelivered  goods,  which 


Skilful  Management  vs.  Welfare  Work     48 

made  them  imagine  that  higher  wages  were  an 
impossibility. 

I  might  give  many  more  of  these  incidents, 
but  the  above  will  sufficiently  demonstrate  how 
inadequate  is  any  treatment  of  the  labor  prob- 
lem which  assumes  that  it  is  something  of  itself 
and  is  not  made  up  of  the  diversified  activities 
of  a  business.  The  labor  conditions  may  fre- 
quently arise  from  ineptness  of  management. 

It  requires  some  delicacy  to  approach  this 
phase  of  labor,  but  there  are  times  when  the 
avoidance  of  facts  is  a  disservice.  Labor  is  pri- 
marily a  management  problem,  and  that  busi- 
ness which  is  most  scientifically  run  has  the  best 
foundation  for  building  permanently  flexible 
labor  relations.  Having  the  facts  in  hand,  a 
bargain  may  be  arrived  at  in  which  there  is  an 
equality  of  advantage.  More  inequalities  arise 
from  ignorance  than  from  malice. 

Going  back  to  the  respective  payments  of 
capital  and  labor,  we  know  that  capital  in  manu- 
facturing is  commonly  paid  only  for  what  it 
does.  (Except  that  where  the  material  content 
of  the  finished  product  is  high,  capital  sometimes 
receives  an  increment  through  the  advance  in 
price  of  materials,  but  it  also  stands  the  chance 
of  losing  by  a  decline  in  materials,  and  in  the 
average  business   the   two   about   stand   off.) 


44     When  the  Workmen  Help  You  Manage 

Why  not,  then,  pay  labor  its  wage  exclusively 
on  what  it  earns? — in  other  words,  pay  exclu- 
sively on  the  basis  of  unit  production? 

We  might  pay  on  a  time  basis,  with  a  specifi- 
cation of  what  must  be  done  during  that  time ; 
or  on  a  piece  basis,  with  a  minimum  of  accom- 
plishment. The  time,  in  both  cases,  is  a  vital 
factor,  for  it  is  the  time  that  the  article  takes 
in  the  shop  which  determines  the  amount  of 
overhead  cost  that  is  absorbed. 

But  in  industry  the  demand  for  the  services 
of  the  worker  depends  upon  the  demand  for  the 
product,  which  means  that  the  wage  rate  has  an 
outside  factor,  not  under  the  influence  of  either 
party,  which  may  cause  any  wage  to  be  unfair 
either  to  the  worker  or  to  the  owner.  The 
owner  loses  on  the  time  rate  when  work  is  fall- 
ing off,  and  the  worker  loses  on  the  piece  rate 
when  he  has  not  enough  to  keep  him  going 
through  the  whole  day  or  week. 

I  never  advocate  in  advance  any  particular 
method  of  payment,  because,  without  knowing 
all  of  the  facts  in  the  case  and  making  a  com- 
plete study  of  conditions,  it  is  quite  impossible 
to  say  that  this  or  that  system  of  payment  will 
produce  the  fairest  results. 

It  is  bad  for  an  employer  to  have  underpaid 
men;  it  is  equally  bad  to  have  men  who  are 


Skilful  Management  vs.  Welfare  Work     45 

rushing  through  work  in  order  to  make  a  high 
piece  score.  But  is  there  not  some  way  in  which 
the  several  advantages  of  these  two  modes  may 
be  combined,  to  the  benefit  of  both  employer  and 
employee  ? 

Good  work  involving  the  creative  faculty  can 
not  be  expected  until  a  living  wage  is  guaran- 
teed. Straight  piece  rates  do  not  guarantee  a 
living  wage.  Is  it  not,  then,  approaching  a  solu- 
tion first  to  pay  a  living  wage,  and  to  start  the 
additional  remuneration  when  a  certain  stand- 
ard has  been  attained — to  make  the  piece  rates 
something  that  is  superimposed  upon  the  gradu- 
ated living  wage  ?  And,  further,  is  it  going  too 
far  in  the  present  thought  that  capital  owes  a 
duty  to  labor  to  guarantee  that  wage  during 
good  conduct? 

Let  us  see.  When  machinery  stops  working, 
every  possible  care  is  taken  to  insure  it  against 
depreciation.  The  idle  time  is  often  used  ad- 
vantageously in  making  a  thorough  overhauling 
that  will  tend  to  prolong  its  life.  No  factory- 
owner  ever  stints  on  the  lubricant  for  a  fine 
machine :  he  would  not  let  it  go  to  rack  and  ruin 
just  because  it  cost  a  little  money  to  keep  up 
repairs.  But  labor  has  been  put  in  a  different 
case.  When  it  ceases  to  work — ^not  because  it 
does  not  desire  to  work,  but  because  the  man- 


46     When  the  Workmen  Help  You  Manage 

agement  has  not  been  skilled  enough  to  provide 
work — it  is  supposed  to  care  for  itself  and  main- 
tain its  future  ability  to  work  as  best  it  may. 
Cutting  down  the  pay-roll  because  of  lack  of 
work  is  supposed  to  be  a  measure  of  economy, 
but  it  is  often  a  most  doubtful  economy,  for 
several  reasons. 

If  the  worker  knows  that  as  soon  as  his  work 
is  done  he  will  be  laid  off,  he  will  spin  out  that 
work  to  the  greatest  possible  extent,  piling  up 
overhead  charges  on  the  owner;  he  will  regard 
his  mere  presence  in  the  shop  as  a  reason  for 
wages.  If  he  is  on  piece  rates,  he  will  combine 
with  his  fellows,  as  in  England,  to  raise  rates 
and  limit  production.  For  if  lengthening  the 
work  period  means  money  in  pocket  to  the 
worker,  he  will  stretch  out  that  work  period  by 
all  methods;  and  it  is  entirely  natural  that  he 
should. 

And,  finally,  while  a  man  is  laid  off  how  will 
he  support  his  physical  well-being  unless  his 
wages  while  working  have  been  so  high  as  to 
give  a  margin  that  will  hold  over  the  idle  pe- 
riod? 

I  can  state  with  confidence  that  the  abuse  of 
machinery,  the  waste  of  materials  and  power, 
and  the  various  overhead  charges  that  result 
from  spinning  out  work  in  order  to  maintain  a 


Skilful  Management  vs.  Welfare  Work     47 

full-time  wage,  would  go  a  long  way  toward 
maintaining  the  extra  wages  bill  that  would 
accrue  were  he  kept  on  the  pay-roll  during  times 
of  poor  business.  The  remainder  would  be 
more  than  covered  by  the  increased  efficiency  of 
the  worker  under  conditions  of  security  and 
plenty. 

It  is  entirely  reasonable,  and  in  keeping 
with  the  wage  system,  to  pay  the  worker  for 
the  quantity  and  quality  of  production.  Quan- 
tity and  quality  do  not  connote  profit,  but  if 
the  disposing  side  of  the  business  can  not  make 
a  profit  when  it  receives  a  sufficient  quantity 
of  good  articles  at  a  fair  price,  then  something 
is  wrong  with  the  design  or  with  the  methods 
of  disposal — and  with  neither  of  these  phases 
has  the  worker  anything  at  all  to  do.  It  is  true 
that  the  worker,  exercising  his  creative  instinct, 
will  undoubtedly  suggest  betterments  of  design; 
but  usually  these  betterments  go  to  facilitating 
production  rather  than  to  facilitating  sales,  for 
the  worker  can  know  the  sales  demand  only  by 
chance. 

The  exact  method  of  payment  must  depend 
upon  circumstances  as  long  as  the  guaranteed 
minimum  exists — and  it  is  to  be  expected  that 
in  some  cases  the  guaranteed  minimum  may 
have  to  be  the  standard  union  rate  for  the  work. 


48     When  the  Workmen  Help  You  Manage 

The  pay  may  be  based  on  the  work  of  the  in- 
dividual, or  of  the  department,  or  of  the  pro- 
ductive section  as  a  whole,  according  to  the 
nature  of  the  work  and  the  size  of  the  estab- 
lishment. It  may  take  the  form  of  a  bonus  on 
quality,  which  is  commonly  far  better  than  a 
bonus  on  production.  It  may  go  on  the  job 
basis — a  fixed  time  being  set  for  a  certain  task, 
which  time  is  longer  than  a  fairly  good  man 
should  take,  and  then  the  premium  calculated 
from  the  time  saved.  There  are  innumerable 
ways  and  means  of  arriving  at  a  fair  basis, 
but  all  of  them  have  these  principles  in  common : 

(1)  Extreme  simplicity,  so  that  the  details 
may  readily  be  understood  by  every  worker; 
any  element  of  doubt  as  to  fairness  (arising 
perhaps  only  from  lack  of  understanding)  will 
kill  cooperation. 

(2)  It  must  be  obvious  that  the  reward  is 
the  result  of  effort  and  skill,  and  the  reward 
must  follow  with  such  swiftness  in  its  increase 
of  earnings  that  the  effort  and  the  reward  will 
be  in  effect  sjmonymous.  A  remote  reward 
kills  sustained  effort. 

(3)  The  method  must  be  thoroughly  sold  to 
the  people;  and  if  the  method  can  not  be  sold 


Skilful  Management  vs.  Welfare  Work    49 

it  is  bad,  no  matter  how  many  points  of  merit 
in  it  may  appeal  to  the  scientific  mind. 

(4)  The  initial  rates  should  be  fixed  in  con- 
junction with  an  elected  committee  of  those 
affected,  and  the  basis  should  be  a  scientific 
time  study,  every  point  of  which  is  understood 
and  approved  by  that  committee. 

(5)  The  initial  rates  should  be  regarded  as 
experimental,  and  all  rates  should  always  be 
open  to  easy  revision,  by  and  with  the  approval 
of  the  committee  on  rates. 

(6)  The  foremen  or  other  officers  directly  in 
contact  with  the  job  should  have  nothing  to  do 
with  rate-fixing  or  rate-changing,  and  com- 
plaints against  rates  should  be  handed  to  the 
committee  and  not  to  the  foremen.  The  fore- 
men are  directors  of  work  and  not  of  wages. 

An  observance  of  the  above  principles  will 
go  far  toward  overcoming  the  chronic  hostility 
to  measuring  pay  by  effort.  That  hostility 
arises  either  from  unfair  rates  or  from  lack  of 
knowledge  of  how  the  rates  are  arrived  at.  It 
is  a  hostility  that  is  to  be  reckoned  with,  for 
a  true  balance  between  the  wages  of  capital 
and  the  wages  of  labor  is  not  to  be  had  unless 
both  sides  are  fair.    Fairness  is  not  a  matter 


50     When  the  Worhmen  Help  You  Manage 

of  courtesy,  but  of  equal  opportunity  to  known 
facts.  It  is  not  without  reason  that  almost 
every  gathering  of  workers  condemns  effort 
payment;  that  nearly  all  trade  unions  are  on 
record  against  the  mode;  that  the  first  act  of 
the  Soldiers'  and  Workers'  Committees,  which 
sprang  up  all  over  Germany  at  the  time  of  the 
revolution,  was  nearly  always  to  pass  .laws  pro- 
hibiting piece  payment. 

But  the  real  objections  are  not  at  all  to  the 
mode.  The  workers  object  to  the  concrete  ap- 
plication, and  the  application  is  commonly  so 
objectionable  that  the  mode  itself  is  made  the 
target.  You  will  find  any  number  of  workmen 
who  insist  that  scientific  rate-fixing  is  only  a 
device  to  wear  out  the  worker  for  the  benefit  of 
the  capitalist.  The  same  sort  of  objection  has 
met  every  effort  to  better  manufacturing. 

The  application  of  power  to  weaving  caused 
riots.  Why?  Because  the  workers  believed 
that  the  mechanical  devices  would  be  used  to 
take  away  what  they  thought  to  be  their  only 
source  of  livelihood.  And  it  is  a  fact  that  many 
machines  have  been  eagerly  welcomed  as  devices 
to  get  ahead  of  the  workers ;  scientific  planning 
has  undoubtedly^  been  used  at  times  for  that 
very  purpose.  The  worker's  opposition  is  not 
without    reason:    he    has    a    basis    of    justice 


Skilful  Management  vs.  Welfare  Work     51 

founded  upon  possible  sporadic  cases  of  injus- 
tice. 

Words  backed  by  facts  cure  injustice.  Words 
backed  by  sentiment  make  it  more  smarting. 

The  worker  is  better  off  to-day  than  he  was  a 
century  ago,  because  of  the  improvements  in  the 
methods  of  industry.  He  is  not  so  well  off  as 
he  should  be,  and  must  he,  if  industry  is  to  pro- 
gress. Is  it  not  more  reasonable  to  suppose 
that  this  betterment  can  be  attained  through 
learning  to  use  what  we  already  have  ?  My  own 
observation  of  industry  teaches  me  that  we  are 
only  on  the  threshold  of  industry  as  a  science. 
To-day  we  are  but  opportunists  in  industry ;  we 
grab  here  and  grab  there,  and  success  is  meas- 
ured by  the  amount  that  sticks  to  the  grabbing 
fingers. 


CHAPTER  III 

HAVE   WB    REACHED   THE   LIMIT   OF    WAGES? 

Standardization  is  good  in  its  field.  But 
in  standardization  lies  the  greatest  danger  to 
American  business  and  prosperity;  for,  unless 
our  standards  are  flexible  and  constantly  open 
to  proper  revision,  we  may  awake  one  fine  morn- 
ing to  discover  that  we  have  standardized 
stupidly.  You  can  not  rigidty  standardize  intel- 
ligence— that  is  active — but  you  can  easily 
standardize  stupidity,  for  that  is  static.  Busi- 
ness has  standardized  stupidity  in  dealing  with 
those  who  work  for  wages. 

Look  at  a  few  cases.  I  found  one  owner 
deeply  troubled  because  he  could  not  afford  to 
pay  as  much  a  day  to  the  gang  on  the  receiving 
platform  of  his  warehouse  as  a  railroad  near  by 
was  doing ;  and  the  railroad  was  taking  the  men. 
He  employed  thirty-three  men  at  day  rates, 
and,  under  conditions  as  they  were,  could  not 
do  with  less;  hence  he  could  not  increase  the 
wage  without  putting  it  in  the  sales  price. 

52 


Have  We  Beached  the  Limit  of  Wages?     53 

Investigation  disclosed  that  the  laborers 
never  walked  faster  than  one  and  three  quarter 
miles  an  hour,  and  that  they  spent  a  deal  of 
time  loafing  while  the  foreman's  back  was 
turned.  By  putting  the  men  on  a  piece-rate 
basis  calculated  at  a  three-mile-an-hour  pace, 
this  problem  solved  itself.  The  present  gang 
numbers  eighteen,  and  are  so  well  paid  that  they 
stay  on  the  job.  The  owner  has  saved  money 
and  the  men  are  making  money.  But  because 
that  owner  saw  only  one  way  of  doing  the  work 
— the  way  honored  by  time — he  could  not  see 
how  wages  might  be  bettered. 

Here  is  another  case.  Custom  had  fixed  the 
proper  gangs  for  large  concrete  mixers,  such 
as  are  used  in  road  work,  at  twenty-one  men. 
But  the  point  that  struck  me  was  that  the 
twenty-one  men  were  not  always  doing  the  same 
kind  of  work.  Sometimes  there  were  three 
sand  shovelers  and  again  only  two ;  there  might 
be  seven  spreaders  here  and  only  five  in  an- 
other place. 

A  careful  study  of  the  various  operations 
originated  a  plan  by  which  the  machine  could 
be  served  by  four  less  men  without  having  any 
of  them  work  a  bit  harder  than  before.  The  re- 
sults were  better  than  those  obtained  with  the 
larger  gang.    A  contractor  with  seventeen  men 


54     When  the  Workmen  Help  You  Manage 

in  a  gang  could  certainly  afford  to  pay  better 
wages  than  the  man  who  thought  he  had  to  have 
twenty-one.  And  I  am  not  sure  now  that  fewer 
than  seventeen  might  not  be  used! 

In  both  these  cases  the  employer  had  settled 
in  his  own  mind  that  he  had  to  have  a  certain 
number  of  men  on  the  job.  When  a  wage  prob- 
lem arose,  neither  owner  could  think  of  anything 
but  paying  out  more  money  to  the  same  number 
of  men  for  the  same  work  that  they  did  before. 
Why?  They  were  intelligent  employers,  but 
they  had  standardized  certain  operations  in 
their  minds  and  thought  the  standards  were  in- 
violate. They  had  not  thought  of  wages  in 
terms  of  service,  because  they  had  become  ac- 
customed to  thinking  of  wages  only  as  money 
paid  out  and  not  as  cooperative  service  re- 
turned. 

Every  one  realizes  after  only  a  moment  of 
thought  that  the  real  basis  of  wages  is  service 
rendered  and  that  this  service  is  measured  by 
the  price  of  the  product.  Suppose  two  men, 
each  receiving  two  dollars  a  day,  turn  out  to- 
gether a  product  that  sells  for  eight  dollars.  If 
one  man  can  turn  out  that  same  product  in  a 
day  he  is  worth  at  least  four  dollars.  The  de- 
creased amount  of  overhead  expense  that  he 
will  accumulate,  as  against  the  two  men,  will 


Have  We  Reached  the  Limit  of  Wages?     55 

permit  the  owner  to  sell  at  less  than  eight  dol- 
lars, and,  thus  increasing  his  sales,  to  make 
larger  annual  profits  by  speeding  the  turnover 
of  capital. 

This  is  the  simplest  possible  demonstration 
that  wages  are  profitably  paid  for  service  rather 
than  for  men,  and  that  the  wage  limit  is  the 
value  of  the  service.  It  is  conclusive — but  it  is 
not  accepted.  Everywhere  you  hear  employers 
and  emploj'-ees  clamoring  about  the  amount  of 
wages — neither  one  likes  the  rates — with  a 
pleasing  disregard  for  the  factor  that  eventu- 
ally determines  wages :  the  service  to  the  public. 
Nowhere  in  business  is  blank  stupidity  so  rig- 
idly standardized  as  in  wages.  Take  some  of 
the  controlling  dogma  of  wage  payment : 

**I  pay  the  market  rate  of  wages;  what  more 
can  I  do?" 

How  many  manufacturers  have  said  that  with 
conscious  pride  ?  I  have  heard  some  thousands 
make  the  statement.  On  its  face  it  seems  fair 
and  sufficient.  But  is  there  a  market  rate  for 
wages?  The  unions  appear  to  agree  with  the 
employer  that  there  is ;  they  commonly  differ  on 
the  quotation.  The  unions  paradoxically  de- 
clare that  labor  is  not  a  commodity,  and  then 
go  on  to  fix  union  rates  as  if  labor  were  a  com- 
modity— as  if  the  workers  in  a  trade  were  as 


66     When  the  Workmen  Help  You  Manage 

alike  as  two  pigs  of  iron.  What  is  the  market 
rate  and  who  makes  it  1 

The  ''market  rate"  is  now  only  a  cant  phrase 
in  merchandising.  There  is  no  market  rate  in 
commodities,  in  spite  of  market  quotations. 
You  find  prices  quoted  for  the  staples,  such  as 
cotton,  wheat,  and  the  like;  but  when  you  go 
to  buy  for  particular  uses  you  discover  that  by 
paying  more  than  the  quoted  rate  you  will  get 
an  especially  good  quality  or  brand  which  will 
save  money  in  the  end  by  being  suited  to  your 
exact  needs.  The  best  purchasing  agents  sel- 
dom buy  goods  at  the  market  price;  they  buy 
that  which  will  give  the  best  service — the  largest 
return  for  the  money  without  regard  to  the 
initial  outlay.  Price  is  neither  a  purchasing 
nor  a  sales  argument  among  long-headed  busi- 
ness men. 

Suppose  a  salesman  had  this  little  talk:  ''I 
can  offer  you  these  goods  at  the  market  price ; 
they  are  no  better  and  no  worse  than  my  com- 
petitor's, and  I  can  not  do  better  than  he  does 
on  delivery  or  credit  terms.  I  have  nothing  to 
offer  you  that  he  has  not.  You  get  no  advan- 
tage of  any  kind  in  buying  from  me,  and  I  know 
no  reason  why  you  should  buy  from  me." 

How  long  would  that  salesman  hold  his  job? 
Is  there  any  conceivable  reason  for  employing 


Have  We  Reached  the  Limit  of  Wages?     57 

such  a  man?  And  yet,  how  does  that  action 
differ  from  that  of  the  employer  who  offers  the 
market  price  to  labor?  Or  the  worker  who  of- 
fers himself  for  hire  at  the  market  price  ? 

The  whole  trend  of  modern  business  is  against 
making  a  product  that  will  merely  join  the  herd 
of  similar  products,  and  is  toward  making  some- 
thing that  will  stand  out — something  that  will 
be  different  and  better  than  the  others.  But 
wage  methods  have  not  caught  up  with  mer- 
chandising, and  they  will  not  until  the  old  ideas 
of  master  and  servant  are  abandoned  and  busi- 
ness is  considered  as  a  democratic,  mutual  enter- 
prise. 

A  delusion  closely  akin  to  the  '' market  rate" 
is  that  somebody — some  higher  power — ''fixes" 
wages,  and  hence  the  rate  is  something  to  rail 
at.  Nobody  fixes  wages.  They  fix  themselves 
through  the  cost  of  living.  In  times  past  they 
have  been  too  low,  and  they  are  probably  too 
low  to-day,  in  spite  of  the  fact  that  most  em- 
ployers think  them  outrageously  high.  The 
manual  worker's  wage  has  never  given  him  a 
sufficient  margin  of  surplus  to  support  and  edu- 
cate a  large  family  or  to  provide  against  his  own 
old  age. 

It  must  be  remembered  that  the  working  life 
of  the  manual  laborer  is  comparatively  short. 


58     When  the  Workmen  Help  You  Manage 

The  bank  president  is  in  his  prime  at  sixty,  but 
at  that  age  the  worker  is  in  his  dotage.  If  it  is 
right  and  just  for  the  bank  president  to  be  able 
to  retire  with  a  competency  at  sixty,  it  is  right 
and  just  for  that  manual  worker,  who  is  as  ef- 
ficient in  his  way  as  the  banker,  to  be  able  to  re- 
tire comfortably  when  he  too  reaches  the  age 
when  his  services  are  no  longer  salable.  As  it 
now  stands,  the  aged  worker  commonly  ends  his 
days  on  the  bounty  of  his  children,  or,  in  some 
countries,  takes  an  old-age  pension. 

The  wage  surplus  over  living  expenses  to-day 
is,  in  some  lines,  considerable — especially  in  oc- 
cupations of  danger ;  but,  on  the  average,  wages 
have  not  much  more  than  kept  pace  with  the  in- 
creased cost  of  living.  It  is  the  hope  of  the 
longer-headed  leaders  of  labor  constantly  to 
hold  advances  due  to  increased  cost  of  living, 
and  then,  by  increased  production,  to  lower  the 
cost  of  living  and  consequently  increase  the 
wage-earner's  net  surplus. 

Wages  go  up  because  of  inflation  or  the  excess 
of  demand  over  supply,  both  of  which  reasons 
are  closely  related.  They  are  always  too  high 
in  war  work,  because  that  work  is  generally 
done  in  such  a  hurry  and  with  so  little  planning 
that  no  facilities  are  offered  for  any  one  to  earn 
a  wage.    In  many  plants  the  men  spend  a  deal 


Have  We  Reached  the  Limit  of  Wages?     50 

of  their  time  hunting  for  some  one  to  tell  them 
what  to  do. 

The  mushroom  industries  of  war  fade  away, 
and  with  them  the  jobs  at  very  excessive  wages. 
The  higher  rate  of  war,  with  some  adjustments, 
can  quickly  be  converted  into  a  low  rate  if  the 
methods  of  production  are  changed  to  suit  the 
wage  instead  of  attempting  to  change  the  wage 
to  suit  the  production.  Of  course,  wages  de- 
cline if  production  is  inefficient — just  as  a  man 
has  no  expense  if  he  does  no  business — but  that 
is  not  the  direction  of  progress. 

The  men  in  this  country  who  declaim  most 
loudly  against  high  wages  are  those  whose  man- 
ufacturing methods  are  most  at  fault — who  are 
themselves  backward.  The  man  who  has  made 
the  most  noise  in  recent  years  about  wages  has 
the  worst  arranged  and  most  wasteful  shop  I 
have  ever  seen.  He  is  as  stubborn  in  resisting 
improvements  as  he  is  in  wages;  I  know  that 
from  bitter  experience.  He  seems  to  hold  that 
the  end  of  industry  is  to  promote  strikes  and 
not  to  produce  marketable  products. 

The  law  of  supply  and  demand — a  law  that 
operates  around  and  above  us — raises  wages. 
They  rise  irregularly.  It  takes  a  little  time  for 
ihe  cost  of  living  to  catch  all  wages,  and  in  the 
meantime  the  worker  gets  a  taste  of  economic 


60     When  the  Workmen  Help  You  Manage 

surplus.  Then,  when  the  cost  of  living  does 
catch  up,  he  wants  another  raise.  And  so  the 
process  goes  merrily  on  until  the  particular  de- 
mand that  has  caused  all  the  disturbance  ceases. 
Until  then,  wages  and  the  cost  of  living  chase 
themselves  around  in  a  circle.  When  the  whis- 
tle blows  to  stop  the  game,  some  trades  and 
localities  are  ahead  of  the  high  cost  of  living 
and  others  are  behind.  Then  matters  proceed 
to  adjust  themselves,  but  with  most  of  the  work- 
ers having  somewhat  improved  their  net  stand- 
ing. This  is  the  way  that  the  worker  has  risen 
from  a  mere  serf  to  the  status  of  a  human  being 
— with  some  small  excursions  into  violence  in 
an  attempt  to  expedite  matters. 

Strikes  never  raise  wages.  If  the  wages  are 
already  high  enough,  the  strike  fails ;  if  too  low, 
it  wins.  But,  in  either  case,  it  is  some  force  out- 
side that  has  really  settled  the  matter.  In  the 
present  day  it  is  the  union  and  not  the  individ- 
ual worker  that  assumes  the  responsibility  of 
holding  the  increases ;  but  the  only  rate  they  can 
hold  is  that  which  can  be  paid  by  the  least  effi- 
cient manufacturer.  Hence  it  is  only  the  inef- 
ficient manufacturer  who  bewails  the  size  of  his 
pay-roll.  The  efficient  employer  should  pray 
for  wages  so  high  that  his  less  efficient  competi- 
tor will  go  out  of  business. 


Have  We  Reached  the  Limit  of  Wages?     61 

Another  current  dogma  is  that  any  given 
product  can  afford  to  have  only  a  certain 
amount  of  wage  included  in  its  cost,  and  that  the 
wage  must  always  be  a  fixed  percentage  of  the 
sales  price.  Hences,  if  wages  do  go  up,  so  do 
the  sales  prices.  This  dogma  is  common  to  both 
employer  and  employee;  it  finds  expression  in 
many  ways.  It  does  not  take  into  account  the 
service  of  a  man;  it  holds  that  his  service  value 
is  fixed  and  inviolate,  and  that  there  is  some- 
thing sacred  about  pre-war  or  pre-any  other  pe- 
riod wages  and  that  we  should  revert  to  them 
with  all  speed. 

Back  in  1912  wages  were  considered  too  high. 
They  have  always  been  ''too  high."  If  we 
could  find  records  of  conversations  among  em- 
ployers in  the  days  when  a  wage  of  a  penny  a 
day  was  quite  general,  doubtless  they  would 
reveal  a  universal  discontent  over  the  extraor- 
dinary expense  of  labor!  ''It  is  simply  un- 
thinkable that  a  mere  worker  should  earn  sev- 
enty-five dollars  a  week, ' '  says  the  short-sighted 
modern  employer. 

The  great  objection  of  employees  to  piece- 
work is  that  a  fair  rate  will  be  changed  simply 
because  the  superintendent  declares:  "Those 
fellows  are  making  too  much  money. ' '  We  find 
densely  serious  thinkers  pronouncing  that  it  is 


62     When  the  Workmen  Help  You  Manage 

not  good  for  workers  to  earn  too  much  money 
— they  buy  pianos  and  make  all  sorts  of  silly 
purchases !  And  all  of  this  rests  solely  on  the 
theory  that  there  is  a  divinely  ordained  limit 
to  the  production  that  a  dollar  in  wage  can 
effect ;  which,  in  turn,  has  its  foundation  in  the 
notion  that  we  really  know  all  that  there  is  to 
be  known  about  manufacturing,  selling,  and  dis- 
tributing. 

As  a  matter  of  fact,  any  very  successful  busi- 
ness man  will  tell  you  that  he  has  gone  only  far 
enough  to  realize  that  what  he  does  not  know 
infinitely  transcends  what  he  does  know.  I  can 
say  with  entire  confidence  that  not  one  out  of 
every  thousand  manufacturers  knows  what  rela- 
tion wages  have  to  the  cost  of  the  finished  prod- 
uct. The  manufacturer  who  does  know  his 
facts  seldom  talks  about  high  wages.  We  can 
ascertain  exact  costs,  but  we  do  not  yet  know 
enough  to  fix  the  limit  of  a  man's  wage,  for 
we  do  not  know  the  capacity  of  the  human 
being. 

It  quite  often  happens  that  salesmen  are  pen- 
alized by  low  commissions,  workmen  by  low 
wages,  and  stockholders  by  passed  dividends, 
simply  because  the  executives  do  not  know 
what  they  are  doing,  but  unfortunately  think 
that  they  know.     Before  it  is  possible  to  esti- 


Have  We  Reached  the  Limit  of  Wages?     63 

mate  what  wages  can  be  paid,  it  is  necessary  to 
know  costs  in  every  department  of  a  business, 
and  in  detail.  I  say  advisedly  ''what  wages 
can  be  paid,"  for  in  the  world  movement  for 
democracy  it  is  becoming  more  and  more  appar- 
ent that  the  owmer  must  prove  that  he  has  a 
right  to  ownership  by  demonstrating  that  men 
working  with  him  are  better  off  than  in  individ- 
ual enterprise.  The  question  now  is  "how 
much"  and  not  ''how  little"  can  be  devoted  to 
wages. 

Take  a  case  in  point.  My  engineering  staff 
examined  a  large  manufacturing  concern  a  few 
years  ago,  and  discovered  that  the  particular 
product  they  pushed,  and  on  which  they  prided 
themselves,  was  sold  at  a  loss.  The  only  reason 
the  company  came  out  on  the  right  side  of  the 
ledger  at  the  end  of  the  year  was  that  some  of 
the  subsidiary  products,  which  they  sold  reluc- 
tantly and  only  because  they  thought  they  had 
to,  yielded  handsome  profits.  How  could  that 
concern  say  that  its  wages  were  too  high  or  too 
low,  when  it  did  not  know  the  costs  of  what  it 
offered  for  sale  ?  Yet  it  was  doing  a  gross  busi- 
ness of  many  millions  a  year,  had  numerous 
branches,  and  was  supposed  to  be  one  of  the 
soundest  companies  in  the  trade. 

An  investigation  in  the  paper  trade   some 


64     When  the  Workmen  Help  You  Manage 

years  ago  showed  that,  with  practically  all  the 
factories  paying  the  same  wage  scales,  and 
buying  their  raw  materials  at  about  the  same 
prices,  the  costs  of  completed  stock  varied 
widely.  Some  concerns  were  making  money  at 
rates  that  meant  only  losses  for  others.  Al- 
though labor  is  not  the  greatest  cost  in  paper- 
making,  yet  it  is  large  enough  to  be  a  serious 
factor,  and  one  would  at  first  impression  think 
that  flat  wage  rates  would  have  meant  approxi- 
mately uniform  costs. 

The  first  step  in  any  wage  consideration,  and 
the  first  step  toward  the  new  idea  in  business, 
is  to  get  the  real  values  on  wages.  We  all  know 
that  cheap  labor  is  not  cheap ;  paid  cotton-pick- 
ers have  proved  cheaper  than  slaves — although 
it  took  a  long  time  so  to  convince  the  South,  be- 
cause they  never  reckoned  the  expense  of  idle 
slaves.  In  any  operation  in  which  the  material 
costs  are  high  as  compared  with  the  labor  costs, 
the  highest  possible  pay  is  the  cheapest  if  it  re- 
sults in  savings  of  material,  or  in  a  fine  product, 
or  in  both.  In  the  grades  of  production  where 
labor  is  the  big  factor,  high  wages  are  economi- 
cal if  the  wastes  of  human  power  can  be  cut  to 
a  minimum.  Wages  are  measured  solely  in 
terms  of  production.  It  is  the  part  of  the  em- 
ployer to  see  that  facilities  for  production  are 


Have  We  Reached  the  Limit  of  Wages?     65 

given,  and  then  it  is  his  right  to  demand  that 
they  be  taken  advantage  of. 

It  is  not  what  one  pays  a  man  that  counts — it 
is  what  he  does. 

Before  the  war  the  sailors  on  the  Great 
Lakes  had  higher  wages  than  anywhere  in  the 
world,  and  yet  the  cost  per  ton  mile  of  freight 
on  the  lakes  was  cheaper  than  anywhere  in  the 
world — because  the  boats  and  the  docks  were 
built  to  give  the  largest  possible  turnovers  in 
cargoes. 

Some  manufacturers  have  sensed  that  the 
amount  of  wages  is  not  an  absolute  figure,  and 
they  have  installed  bonus  systems  or  other  wage 
incentives.  Sometimes  these  work  and  some- 
times they  do  not.  But  if  the  premium  does  act 
as  an  incentive,  then  it  is  very  common  for  the 
employer  to  cut  the  rate  until  it  is  just  a  bit 
higher  than  the  elusive  market  rate.  Or,  again, 
the  premium  may  not  increase  production. 

I  recall  one  firm  that  fixed  a  rate  of  one  and 
one  half  cents  a  piece  for  all  pieces  over  one 
hundred;  the  daily  rate  was  three  cents  a  piece 
on  the  standard  of  one  hundred.  The  workers 
quickly  saw  that  to  earn  a  dollar  after  they  had 
passed  the  hundred  mark  required  just  twice 
as  much  work  as  before,  and  they  did  not  exert 
themselves,    I  suggested  that  they  keep  the  rate 


66     When  the  Workmen  Help  You  Manage 

of  three  dollars  for  the  first  hundred,  but  pay 
six  dollars  a  hundred  for  the  excess.  As  a  re- 
sult the  production  increased  thirty-five  per 
cent. ;  and,  although  the  rate  was  really  higher, 
the' men  making  an  average  of  forty-one  cents  an 
hour  as  against  a  former  thirty  cents,  the  les- 
sened overhead  charge  made  a  net  decrease  of 
five  per  cent,  in  the  cost — and  that  without  tak- 
ing into  account  the  lowering  of  labor  turnover 
by  gaining  a  better  and  more  satisfied  class  of 
men. 

Or  again  it  may  be  that  a  little  skill  and  fore- 
sight will  cut  out  wastes  that  will  absorb  in- 
creased wages. 

Take  what  would  seem  to  be  a  small  matter. 
The  Government  ordered  certain  classes  of 
underwear  to  be  baled  instead  of  being  packed 
in  the  usual  wooden  cases.  The  size  of  the 
burlap  and  paper  was  specified  as  thirty-six 
inches  by  fifty  inches,  in  order  that  the  coverings 
might  be  used  again.  There  is  quite  a  differ- 
ence in  the  bulk  of  a  bale  of  size  thirty-fours 
as  compared  with  a  bale  of  forty-fours.  The 
foreman  of  the  packing-room  found  that  the 
standard  made  a  tight  fit  for  the  larger  sizes, 
and  he  ordered  all  the  burlap  to  be  cut  fifty-five 
inches  long.  The  additional  length  was  really 
needed  for  the  large  bales,  but  it  was  mere  waste 


Have  We  Reached  the  Limit  of  Wages?     67 

on  the  smaller ;  by  cutting  the  coverings  in  two 
sizes  that  five  inches  of  burlap  which  had  been 
wasted  on  part  of  the  product  saved  twelve  dol- 
lars and  sixty  cents  a  day,  or  three  thousand, 
seven  hundred  and  eighty  dollars  a  year! 

In  every  phase  of  the  knitting  industry  the 
wastes  are  great  because  of  the  almost  universal 
habit  of  cutting  rates  when  an  employee  earns 
more  than  the  foreman  thinks  should  be  earned. 
A  girl  who  can  earn  sixteen  dollars  a  week  on  a 
piece  rate  is  far  more  valuable  than  one  who 
can  earn  only  twelve  dollars,  because  of  the  less 
overhead  that  the  speedier  girl  takes ;  but,  com- 
monly, an  operator  with  the  dexterity  to  turn 
out  as  much  in  five  days  as  the  average  can  in 
six  will  quit  at  Friday  noon  in  order  not  to  be 
a  party  to  lowering  rates.  Thus,  because  of  the 
dogma  that  a  knitter  should  not  earn  more  than 
a  certain  amount,  the  employee  loses  wages,  the 
employer  loses  business,  and  the  public  pays 
too  much  for  its  knit  goods. 

A  low  piece  rate,  like  a  low  wage,  has  the 
backfire  of  increased  waste  of  material  which 
often  more  than  overcomes  the  saving  in  wages. 
I  found  that  the  rates  in  the  galvanizing  de- 
partment of  a  large  Eastern  plant  had  been  set 
with  the  thought  that  a  man  could  make  a  fair 
day's  pay  only  by  forcing  to  the  limit.     The 


68     When  the  Workmen  Help  You  Manage 

workers  did  force,  and  they  got  production ;  but 
in  order  to  make  their  quotas  they  pulled  the 
pieces  out  of  the  galvanizing  bath  very  quickly 
and  with  a  thicker  deposit  of  metal  than  was 
necessary.  The  best  galvanizing  is  done  rather 
slowly.  We  raised  the  rates  twenty  per  cent. ; 
the  men  took  more  time  at  their  work,  and  the 
labor  cost  per  piece  was  higher.  But  so  much 
spelter  was  saved  by  the  more  careful  dipping 
that  the  department  cost  the  company  twelve 
thousand  dollars  a  year  less  than  it  had  before. 
They  saved  money  by  eliminating  the  waste  of 
hasty  work. 

I  have  taken  the  employer's  usual  approach 
to  wages  in  an  effort  to  show  that  wages  are 
seldom  what  they  seem  to  be,  and  one  must  have 
a  very  thorough  and  scientific  knowledge  of  a 
business  to  be  able  to  say  that  wages  are  high 
or  low.  The  fact  that  they  have  repeatedly 
been  raised  does  not  mean  that  they  are  high, 
nor  does  the  fact  that  they  have  been  lowered 
mean  that  they  are  low.  They  are  high  if  they 
do  not  return  value;  they  are  low,  regardless  of 
their  total  expression  in  dollars,  if  they  do  re- 
turn value. 

There  is  no  reason  in  the  world  that  a  com- 
mon worker  should  not  make  one  hundred  and 
fifty  dollars  a  week — if  he  does  that  much  work. 


Have  We  Reached  the  Ldmit  of  Wages?     69 

And  it  is  the  combined  fault  of  tlie  employer  and 
the  employee  if  he  does  not  do  that  much  work. 
But  the  fault  of  neither  is  chronic.  If  both  re- 
gard a  wage  increase  as  something  to  add  to 
cost,  and  not  as  a  step  toward  cheapening  the 
product,  then  the  raise  is  wrong.  Raising  hu- 
man costs  to  save  eventual  costs  sounds  para- 
doxical, but  that  is  the  trend  of  scientific  indus- 
tiy,  and  marks  the  passage  of  the  worker  from 
slave  to  fellow-artisan  and  of  the  owner  from 
blind  to  enlightened  manufacturing. 

That  is  not  a  fanciful  progression;  neither  is 
it  the  opening  for  a  homily  on  rigid  scientific 
management.  It  is  merely  the  result  of  hu- 
man management  in  which  both  the  employer 
and  the  employee  take  the  view  that  their  sep- 
arate prosperities  depend  upon  turning  out  a 
good  product  at  a  low  cost. 

It  is  really  almost  impossible  to  survey  even 
the  commonest  operation  without  discovering 
that  it  is  not  only  costing  too  much,  but  that 
no  one  is  benefiting  from  the  increased  cost. 
The  workers  are  not  being  paid  as  much  as 
they  should  earn,  the  owner  is  paying  too  much, 
and  the  public  is  being  mulcted  in  the  final  cost. 

Three  gangs  of  hand-truckers  were  working 
at  a  large  Eastern  factory.  They  were  sup- 
posed to  be  working  at  the  very  limit,  and  fre- 


70     When  the  Workmen  Help  You  Manage 

quently  put  in  overtime.  Their  wages  were 
low  because  the  work  required  no  particular 
skill ;  it  was  generally  supposed  that  a  contem- 
plated increase  of  business  would  require  still 
another  gang  to  be  taken  on.  I  offered  a  much 
higher  rate,  based  on  a  study  of  the  actual 
performance,  provided  that  two  gangs  did  all 
the  work.  The  men  turned  to  with  a  will,  and 
two  gangs  are  now  not  only  attending  to  what 
the  three  gangs  formerly  did,  but  also  have  so 
increased  their  capacity  as  to  absorb  the  in- 
creased volume. 

They  discovered  for  themselves  that  only  one 
man  is  necessary  to  a  truck  where  formerly  they 
insisted  that  the  hauling  was  really  too  much  for 
two  men!  The  workers  are  getting  thirty-six 
per  cent,  more  money  than  they  did  before,  but 
the  company  is  paying  twenty-one  and  seven 
tenths  per  cent,  less  for  the  total  service. 

For  the  handling  of  metal  under  heat  a  com- 
pany had  always  used  squads  of  six  men,  each 
of  whom  performed  a  certain  operation  at  fixed 
intervals.  By  a  study  of  the  job  it  seemed  that 
four  trained  men  were  enough.  By  changing 
the  old  method  of  work  (which  simply  involved 
having  two  men  take  three  steps  each),  four  men 
to  a  squad  proved  to  be  quite  sufficient.  The 
company  saved  forty-eight  men  a  day,  or  thirty- 


Have  We  Reached  the  Limit  of  Wages?     71 

five  thousand  dollars  a  year,  under  the  new 
formation — and  this  simply  by  using  some  of 
the  capacity  latent  in  the  force. 

In  another  factory,  because  the  tools  were  in- 
conveniently arranged,  the  employer  was  pay- 
ing sixty  per  cent,  of  his  total  pay-roll  for  time 
spent  in  moving  about  to  get  things.  He 
thought  that  he  was  hiring  men  for  work;  he 
was  in  fact  paying  for  pedestrian  endurance. 
And  everybody  lost  on  the  deal. 

I  have  cited  these  cases,  and  I  might  cite  many 
more,  merely  to  show  that  the  important  thing 
is  not  the  wage  paid  but  the  return  on  wages, 
and  that  the  return  on  wages  is  not  an  absolute 
figure  but  depends  upon  how  the  individuals 
grasp  the  job  on  hand.  Neither  employer  nor 
employee  can  get  the  maximum  service  unless 
the  minds  of  both  are  centered  upon  the  single 
object  of  service  instead  of  upon  the  nearest  dol- 
lar. 

Nearly  everything  depends  upon  the  approach 
and  the  amount  that  the  individual  has  to  say 
about  his  o^ii  placing.  If  any  management  at- 
tempts to  effect  savings  in  which  it  alone  will 
benefit,  it  will  and  ought  to  fail.  The  reason 
that  many  plans  involving  personnel  reductions 
fail  is  that  the  employer  tries  to  reap  the  whole 
benefit. 


72     When  the  Workmen  Help  You  Manage 

The  master  commonly  approaches  labor-sav- 
ing with  the  thought  that  thereby  he  can  get 
the  better  of  the  workmen — in  fact,  this  is  the 
strongest  argument  an  industrial  engineer  can 
offer.  The  worker  sees  in  doing  the  work  with 
fewer  men  the  figure  of  the  grasping  employer- 
capitalist  trying  to  squeeze  out  more  money. 
Both  the  worker  and  the  owner  imagine  that 
there  is  only  so  much  business  in  the  whole 
world.  The  worker  wants  to  spread  the  busi- 
ness thin,  so  that  he  can  always  have  a  job;  the 
owner  wants  to  get  all  of  that  business  for  him- 
self by  brute  force.  Neither  recognizes  that 
bettering  service  creates  buyers,  or,  to  put  it 
another  way,  that  every  wage  increase  which  is 
not  added  to  the  cost  of  production  brings  into 
play  a  new  purchasing  power  that  flows  through 
every  channel  of  business.  When  a  maker  of 
locomotives  finds  a  way  to  make  them  cheaper 
by  paying  higher  wages,  he  at  once  sets  in  mo- 
tion an  added  demand  for  goods  which  eventu- 
ally makes  the  railroads  buy  more  locomotives. 

The  interests  of  the  employer  and  the  worker 
are  really  mutual,  and  it  is  the  part  of  the  em- 
ployer to  make  that  fact  known  in  more  than 
words.  It  is  quite  useless  for  him  to  talk  about 
mutual  interest  and  then  take  no  steps  to  study 
how  that  interest  can  be  cultivated.     It  is  not 


Hax)e  We  Reached  the  Limit  of  Wages?     73 

showing  an  interest  in  employees  toploftily  to 
raise  wages  and  then  add  them  to  the  price  of 
the  product ;  that  is  only  a  prelude  to  eventually 
reduced  business. 

The  only  way  in  which  mutuality  can  be  es- 
tablished is  to  take  the  workers  into  actual  con- 
fidence and  conference  through  their  own  elected 
agents.  Give  to  them  a  part  in  the  management 
of  the  affairs  in  which  they  are  most  intimately 
concerned — hours,  wages,  and  conditions  of 
work.  We  all  know  that  driving  will  not  attain 
the  same  results  as  leading.  You  can  force  a 
man  to  work  hard  because  he  needs  the  money, 
but  you  can  not  thus  give  him  a  fellow  interest 
with  you.  You  may  make  a  dog  pull  a  cart  by 
dangling  a  bit  of  meat  always  before  his  nose — 
but  that  dog  will  not  perforce  love  either  you  or 
the  cart.  If  he  is  a  regular  dog,  he  will  shake 
himself  and  ''light  out"  the  moment  after  he 
swallows  the  meat. 

But  how  are  you  going  to  persuade  a  man  to 
work  with  you  if  his  union  says  that  a  certain 
number  of  men  are  necessary  for  a  job,  and 
that  it  must  be  done  in  only  one  way,  and  that 
no  man  shall  be  permitted  to  turn  out  more  than 
a  fixed  amount  within  a  stated  period?  The 
unions  are  wrong  in  stifling  better  methods  of 
work;  they  are  wrong  in  putting  the  so-called 


74     When  the  Workmen  Help  You  Manage 

anti-efficiency   laws    through   in    many    states. 

Thomas  A.  Edison  was  quite  right  when  he 
said,  ''The  worst  enemy  of  the  worker  is  an  in- 
efficiently run  shop."  But  the  unions  have  a 
measure  of  right  in  their  fears :  they  know  that 
the  employer  is  not  always  after  better  methods 
for  the  benefit  of  either  the  worker  or  the  public. 
He  wants  increased  returns;  and,  because  he 
will  not  express  the  increased  efficiency  in  lower 
prices  to  the  public  and  higher  wages  to  the 
men,  the  unions  know  that  thereby  no  additional 
markets  are  created  and  that  the  economies 
really  do  mean  less  work  for  the  wage-earner. 
They  are  no  more  and  no  less  short-sighted  than 
the  employer. 

A  mutuality  of  effort  is  attainable.  Once 
attained,  the  reason  for  the  opposition  of  the 
worker  is  removed,  and  then  wages  may  be 
based  upon  the  service  rendered  and  the  value 
of  that  service  can  be  measured  according  to  the 
respective  contributions  of  the  employer  and  the 
employee,  and  a  balance  struck  satisfactory  to 
each.  This  involves  not  so  much  a  reorganiza- 
tion of  business  as  a  change  of  mind  regarding 
the  objects  of  business.  When  the  worker  can 
help  fix  his  own  limit  on  wages,  he  will  have  a 
measure  of  joint  proprietorship.  The  cure  for 
irresponsibility  is  more,  not  less,  responsibility. 


Have  We  Readied  the  Limit  of  Wages?     75 

When  a  man  works  for  himself,  the  only  limit 
to  his  remuneration  is  his  ability.  That  same 
principle  can  be  applied  in  large  business. 

And  if  any  one  thinks  that  it  is  not  worth 
while  to  talk  seriously  about  wages  and  that 
things  will  shortly  be  going  along  in  the  same 
old  way,  with  more  workers  than  work,  let  him 
reflect  upon  these  three  facts : 

(1)  When  all  the  present  workers  are  redis- 
tributed, we  shall  have  barely  enough  to  man 
industry. 

(2)  We  shall  not  receive  great  yearly  drafts 
of  foreigners,  who  before  the  war  made  the 
supply  adequate. 

(3)  As  industry  increases — and  it  must — we 
shall  need  more  men,  and  we  have  nowhere  from 
which  to  draw  them. 


CHAPTER  IV 

HARNESSING  THE  CREATIVE   INSTINCT 

Almost  invariably  I  have  found  that  when  in 
plant  management  the  emphasis  is  put  upon 
quality  production,  the  quantity  also  rises,  but 
that  when  the  request  is  only  for  quantity,  the 
quality  decreases.  There  are,  of  course,  excep- 
tions, as  to  any  rule ;  but  it  is  a  curious  fact  that 
the  average  workman,  being  pressed  solely  for 
quality,  will  commonly  attain  a  larger  produc- 
tion than  when  he  is  pressed  solely  for  quantity. 
I  say  this  is  a  curious  fact.  It  is  so  only  on  first 
impression. 

One  would  imagine  that  a  man,  being 
spurred  on  to  attain  a  certain  output  and  de- 
voting himself  entirely  to  output,  would  natur- 
ally do  more  work  than  if  he  were  asked,  not  to 
attain  any  certain  output,  but  to  give  himself  up 
wholly  to  the  making  of  perfect  articles.  This 
first  impression,  however,  neglects  to  take  into 
consideration  that  human  trait  which  is  of  su- 
preme importance  not  only  in  industry  but  also 

76 


Harnessing  the  Creative  Instinct      77 

throughont  the  entirety  of  life— the  creative  in- 
stinct. 

"Creative  instinct"  has  a  formidably  emdite 
sound.  It  brings  to  mind  an  impractical  discus- 
sion of  psychological  traits,  and  seems  to  lead 
away  from  the  brass  tacks  that  make  up  the 
business  of  profit.  But  it  is  by  recognizing  hu- 
man reactions  that  we  can  develop  industrial 
relations.  The  modern  factory-owner  considers 
himself  ill  equipped  if  he  has  not  a  laboratory 
in  which  experts  study  the  properties  of  mate- 
rials. An  automobile  manufacturer  would  not 
think  of  using  steel  without  a  most  exhaustive 
study  of  what  that  steel  would  do  under  any  and 
all  circumstances.  Why,  then,  should  the  study 
of  human  reactions  be  considered  out  of  place  in 
industry! 

Is  it  not  merely  for  the  same  reason  that 
caused  the  staid  and  conservative  manufacturer 
of  a  couple  of  decades  ago  to  dub  all  laboratory 
experimentation  as  sheer  tomfoolery?  The 
staid  and  conservative  manufacturer  installed 
laboratories  and  testing  processes  when  he 
found  that  the  less  staid  and  conservative  manu- 
facturer who  had  all  these  things  was  getting 
the  business.  The  factory-owner  who  to-day 
refuses  to  take  into  account  that  there  is  in  his 
business  a  human  element  worthy  of  the  closest 


78     When  the  Workmen  Help  You  Manage 

study  will  shortly  find  himself  in  exactly  the 
condition  of  the  man  who  declared  that  in- 
vestigation of  the  properties  of  materials  was 
rot. 

"We  have  gone  far  in  the  study  of  materials. 
"We  have  progressed  enough  to  have  an  inkling 
of  how  small  our  actual  knowledge  is,  as  com- 
pared with  the  knowledge  that  we  may  some  day 
have.  But  where  the  man  is  concerned  our 
absolute  knowledge  is  practically  nil,  and  conse- 
quently industry  is  to-day  lop-sided.  Mechani- 
cal engineering,  for  instance,  gives  but  little 
attention  to  the  fact  that  machines  and  mate- 
rials are  used  by  men.  Industrial  engineering 
does  recognize  that  men  are  a  not  unnecessary 
portion  of  factory  equipment ;  but  its  narrower 
aim  has  been  to  make  the  men  just  as  much  like 
machines  as  possible. 

"We  would  not  think  of  making  a  casting  with- 
out a  profound  knowledge  of  how  the  metal  was 
going  to  act  in  the  mold  and  afterward;  but 
every  day  we  make  industrial  molds  with  only 
the  most  casual  attention  to  what  is  going  to 
happen  to  the  human  being  when  we  attempt 
to  pour  the  man  into  them.  The  trouble  is  that 
the  human  being  usually  will  pour.  If  there  is 
a  sufficient  supply  of  what  we  are  pleased  to 
call  labor,  there  are  precious  few  arrangements 


Harnessing  the  Creative  Instinct      79 

that  are  too  obnoxious  for  the  man  who,  at  the 
moment,  desperately  needs  a  job.  But  there  is 
an  antipodal  distinction  between  filling  a  factory 
with  men  and  getting  a  working  force. 

Sometimes,  while  watching  the  river  of  em- 
ployees bubbling  through  the  large  modem  in- 
dustrial institution,  one  might  imagine  that  in- 
dustrial requirements  were  satisfied  by  keeping 
a  steady  flow  of  men  through  every  job  in  every 
department.  During  the  period  of  war  work 
one  might  well  have  likened  the  procession  of 
workers  to  some  vast  pilgrimage,  pausing  for  a 
moment  or  two  at  shrines  represented  by  fac- 
tories. As  far  as  the  shipyards  and  powder 
plants  were  concerned,  the  workers  simply  came 
right  in,  turned  around,  and  walked  right  out 
again. 

It  is  easy  to  put  all  this  shifting  and  changing 
down  to  human  perversity — to  term  it  a  mad 
scramble  for  the  dollar,  and  say  that  it  is  per- 
fectly natural  that  the  scramble  should  be  thick- 
est where  there  are  most  dollars.  That  is  the 
superficial,  unthinking  view.  Job-changing  is 
unnatural ;  the  normal  man  likes  to  be  interested 
in  something. 

The  workman  who  will  loaf  with  consummate 
skill  during  the  day  may,  at  night,  work  very 
hard  upon  a  dolPs  house  for  his  little  girl,  lav- 


80     TV  hen  the  Workmen  Help  You  Manage 

ishing  upon  it  all  the  tender  care  of  craftsman- 
ship. He  has  no  interest  in  his  daily  task,  but 
he  has  a  deep  interest  in  the  home  job  that  he 
has  set  for  himself.  Is  this  the  fault  of  the 
man  or  of  the  job?  Why  should  he  be  inter- 
ested in  one  and  not  in  the  other?  Both  are 
work,  and  the  second  will  not  bring  a  financial 
reward. 

The  difference  is  that  in  the  factory  job  he 
probably  does  not  know  what  he  is  doing;  he  is 
simply  going  through  a  monotonous  routine  and 
doing  certain  work  because  he  is  told  to  do  it, 
and  without  an  idea  of  just  what  part  he  plays 
in  the  final  product,  what  his  relative  impor- 
tance is,  or  what  is  the  value  of  that  with  which 
he  is  working.  He  has  no  measure  of  personal 
responsibility  in  the  factory  as  high  as  that  of 
the  machine  he  operates.  There  is  nothing  to 
draw  out  of  him  the  natural  and  fundamental 
instinct  of  creation. 

But  when  he  is  building  the  doll's  house  the 
situation  is  different.  He  is  making  something 
of  his  own.  It  will  reflect  credit  or  discredit 
upon  him,  according  to  the  skill  that  he  puts 
into  it.  He  knows  the  cost  of  everything  that 
enters,  because  the  money  for  the  material 
comes  out  of  his  own  pocket.  He  will  spend 
whatever  is  necessary  to  achieve  the  result  that 


Harnessing  the  Creative  Instinct      81 

lie  desires — but  not  a  penny  more.  He  is  ful- 
filling the  ideal  of  creative  work. 

In  our  ignorance  of  the  importance  of  the 
human  element  in  industry,  we  have  thought 
that  we  might  substitute  something  for  this  cre- 
ative instinct — something  made  of  metal  and 
propelled  by  power.  We  have  evolved  ma- 
chines that  are  infinitely  more  accurate  than  the 
human  hand,  and  some  of  them  are  so  nearly 
automatic  as  seemingly  to  be  attended  with  a 
minimum  of  human  skill. 

We  have  come  to  think  of  them  as  machines 
rather  than  as  enlarged  tools,  and  to  forget 
that,  no  matter  how  perfect  a  machine  may  be, 
it  will  not  turn  out  a  perfect  product  unless  fed 
with  the  right  material,  kept  in  order,  and  oper- 
ated at  the  correct  speed.  The  most  highly 
automatic  machine  is  no  better  than  a  dull  chisel 
in  the  hands  of  a  carpenter,  unless  the  operator 
feels  that  he  is  the  master  of  that  machine — that 
it  is  his  tool,  and  that  it  will  do  as  his  skill  di- 
rects. If  he  has  the  sense  of  mastery,  he  can 
not  take  the  attitude  that  it  is  no  business  of 
his  how  the  machine  is  working,  and  this  finds 
its  immediate  reflection  in  the  reduction  of  idle 
machine  hours,  repair  costs,  and  spoiled  mer- 
chandise. 

In  one  mill  I  recall  that  the  spinning- Jennys 


82     When  the  Workmen  Help  You  Manage 

were  idle  as  much  as  fifteen  per  cent,  of  the 
time,  simply  because  the  whole  responsibility 
for  the  operation  of  the  department  had  been 
put  upon  the  shoulders  of  the  foreman,  and  he 
had  so  many  other  things  to  do  that  he  had 
neglected  to  keep  the  automatic  stops  in  repair. 
Putting  and  keeping  the  machine  in  repair,  on 
the  responsibility  of  the  operator,  decreased  the 
idle  time  to  seven  per  cent,  and  increased  pro- 
duction eight  per  cent. — without  taking  into  ac- 
count the  saving  on  goods  through  the  elimina- 
tion of  rejects. 

In  a  factory  making  automobile  parts  the  idle 
machine  hours  amounted  to  thirty-six  per  cent. 
on  certain  machines,  which  were  the  ''neck  of  the 
bottle ' '  in  the  production  scheme. 

Before  I  investigated  conditions  here,  the 
owners  had  planned  to  increase  the  number. 
An  analysis  of  the  idle  time  showed  that  four- 
teen per  cent,  of  it  was  due  to  changing  dies,  ten 
per  cent,  to  material  shortages,  seven  per  cent, 
to  breakdowns,  three  per  cent,  to  labor  shortage, 
and  two  per  cent,  to  miscellaneous  items. 

Those  machines  had  not  been  used  as  tools. 
The  men  had  simply  let  the  machines  operate  as 
such  until  a  particular  job  was  finished,  and  then 
they  shut  them  down  and  changed  dies  for  the 
new  job.     It  is  but  a  slight  exaggeration  of  th« 


Harnessing  the  Creative  Instinct      83 

real  situation  to  say  that  the  foremen  and  work- 
ers attended  the  machines. 

The  change  was  very  simple.  It  involved 
merely  a  change  in  view-point — considering  the 
machine  in  relation  to  the  work,  which  meant 
providing  dies  and  material  beforehand  and 
seeing  that  they  were  ready  when  needed.  This 
is  the  prevision  of  the  master  of  the  machine, 
as  opposed  to  the  machine  as  the  master. 

In  this  particular  instance  the  suggestion  of 
mastery  came  from  above,  by  the  way  of  an  in- 
dustrial engineer;  but  the  reason  that  a  per- 
fectly obvious  change  had  not  been  made  from 
below  was  that  none  of  the  people  in  the  depart- 
ment had  any  idea  of  their  own  relation  to  the 
entire  process  of  production — they  merely  went 
through  the  motions  that  the  machines  asked  of 
them. 

No  matter  how  close  is  the  supervision  of 
machines  from  above,  the  best  results  can  not 
be  had  unless  the  men  below  also  supervise. 
Complete  and  efficacious  supervision  springs 
from  below.  A  man  expending  true  creative 
forces  supervises  himself;  therefore,  is  not  the 
best  of  all  supervision  that  which  stimulates 
these  creative  forces'? 

The  instinct  to  create  is  only  one  out  of  many 
that  go  to  make  up  a  human  being,  and  if  we 


84     When  the  Workmen  Help  You  Manage 

are  to  have  the  real  cooperation — not  merely  the 
services — of  a  whole  human  being,  the  condi- 
tions of  work  plainly  must  be  such  as  to  satisfy, 
in  so  far  as  possible,  these  instincts. 

Translating  this  into  material  phraseology, 
the  best  realization  of  the  human  being  is  to  be 
had  only  when  his  composition  is  taken  into  ac- 
count, just  as  the  laboratory  teaches  us  that  the 
finest  properties  of  special  steels  are  to  be  ad- 
vantaged only  when  care  is  taken  to  avoid  cer- 
tain practices  in  fabrication.  It  was  thought 
that  anthracite  coal  would  not  bum  until  an 
accident  demonstrated  that  the  trouble  was  not 
with  the  hard  coal  but  with  treating  it  as  soft 
coal. 

When  you  analyze  the  success  of  certain  em- 
ployers in  dealing  with  their  people,  you  will  be 
struck  with  the  fact  that  they  unwittingly, 
through  innate  knowledge  of  human  nature, 
satisfy  the  instincts  of  workers.  Other  employ- 
ers, without  this  personal  quality,  can  not  gain 
labor  harmony. 

What  are  the  instincts,  and  how  are  they  to  be 
satisfied?  If  industry  satisfies  or  provides  the 
means  for  the  satisfaction  of  the  instincts,  it  is 
bound  to  be  successful.  Otherwise  it  can  not 
be. 

The  first  instinct  is  to  preserve  family  and 


Harnessing  the  Creative  Instinct      85 

self,  and  this  is  expressed  in  the  demand  for  at 
least  a  living  wage.  Wages  are  by  no  means 
the  solution  of  industrial  troubles,  but  without 
living  wages  there  can  be  nothing  else  than 
trouble.  Wages  come  first,  but  not  in  the  sense 
that  anything  can  be  bought  at  a  price.  Loyal 
service  can  not  be  bought.  The  wage  that  I 
have  in  mind  is  a  base  wage  and  is  calculated  on 
the  cost  of  living. 

The  parental  instinct  is  a  very  powerful  one. 
The  men  and  women  who  will  not  first  of  all 
care  for  their  children  form  such  a  small  per- 
centage of  mankind  that  they  need  not  be  con- 
sidered in  any  general  discussion.  When  the 
high  cost  of  living  rises  the  family  is  threatened 
with  destruction,  and  naturally  the  proper  sort 
of  parent,  who  is  also  the  proper  sort  of  work- 
man, must  have  his  wages  increased  to  meet  the 
decrease  in  the  purchasing  power  of  the  dollar. 

After  passing  the  point  of  sustenance,  the 
worker,  just  as  does  every  one  else,  wants  some- 
thing of  the  good  things  of  life.  Below  that 
point,  however,  nothing  can  be  expected  in  the 
way  of  work  and  cooperation;  for  when  the 
struggle  for  mere  existence  is  uppermost  there 
can  be  no  time  to  think  of  work  other  than  as  so 
many  dollars. 

The  argument  for  a  living  wage  is  unanswer- 


86     When  the  Workmen  Help  You  Manage 

able,  and  it  is  quite  useless  to  discuss  industrial 
relations  unless  the  minimum  wage  that  a  man 
or  woman  can  earn  is  enough  to  support  life  in 
a  degree  of  comfort ;  if  that  wage  is  not  paid  the 
discussion  of  relations  properly  belongs  to  the 
psychology  of  slavery. 

The  living  wage  is  measured,  not  by  the 
amount  paid  in  any  one  week,  but  by  the  amount 
paid  throughout  the  year;  for  the  worker,  it 
may  be  remarked,  can  not  go  into  winter  quar- 
ters, like  a  bear,  and  live  on  nothing  for  a  few 
months.  Therefore  the  payment  of  a  living 
wage — the  satisfaction  of  the  instinct  for  mere 
self-preservation — at  once  involves  the  year's 
planning  by  the  employer. 

It  is  the  custom  in  many  factories  to  regard 
production  as  purely  seasonal  and  to  expect  to 
shut  down  through  at  least  a  small  part  of  the 
year.  Why,  then,  should  the  owners  of  these 
factories  be  surprised  when  their  workers  ask 
for  large  wages  during  the  busy  periods  ?  They 
would  be  quite  without  economic  sense  if  they 
did  not ;  for,  even  if  the  employer  considers  it  no 
business  of  his  how  the  men  get  through  the 
slack  period,  it  is  most  emphatically  the  busi- 
ness of  the  men  themselves. 

Most  of  the  demands  made  by  workmen  for 
excessive  wages  during  the  war  period  was  due 


Harnessing  the  Creative  Instinct      87 

to  the  idea,  everywhere  current,  that  the  work 
was  of  short  duration  and  that  after  the  war 
there  would  be  no  work  for  anybody.  Owners 
calculated  their  own  prices  on  that  basis,  but 
they  were  amazed  when  the  employees  did  like- 
wise. 

The  matter  of  twelve  months'  outlet  for  pro- 
duction is  an  essential  in  well-regulated  indus- 
try, and  forms  a  part  of  the  living  wage  prelimi- 
nary. In  a  later  chapter  I  discuss  the  ways  and 
means  of  obtaining  such  production  and  give 
concrete  examples ;  but  here  it  is  enough  to  say 
that  I  have  yet  to  see  the  business  that  can  not 
either  be  continued  through  the  whole  year,  or 
be  organized  to  take  on  another  seasonal  prod- 
uct, so  that  the  full  force  can  be  used  through 
the  whole  year. 

After  having  fixed  the  living  wage  as  a  mini- 
mum, we  come  into  the  field  of  remuneration 
where  the  creative  instinct  can  be  spurred  on  to 
make  more  and  more  money  for  the  three  par- 
ties to  industry — the  employer,  the  employee, 
and  the  public.  It  is  here  that  the  fitness  of 
the  man  can  be  recognized.  Contrary  to  gen- 
eral belief,  this  is  not  opposed  to  the  tenets  of 
the  unions,  which  some  think  are  committed  to 
equal  pay  regardless  of  ability. 

Before  a  recent  meeting  of  the  Labor  Adjust- 


88     When  the  Wor^kmen  Help  You  Manage 

men  Board  a  union  representative  was  asked: 

"Do  you  feel  that  pay  or  wages  should  be 
dependent  in  any  way  upon  the  fitness  of  the 
man  who  gets  the  wages  ? ' ' 

Answered  the  union  officer:  ''Above  the 
minimum  I  do.  I  believe  the  union  should 
establish  a  minimum  wage,  according  to  the 
circumstances  of  living;  but  it  is  entirely  op- 
tional with  the  employer  to  grade  his  men  ac- 
cording to  their  value  above  that  scale." 

We  can,  then,  take  it  as  settled  fact  that  one 
need  not  waste  time  searching  for  better  work, 
or  for  cooperation,  or  for  any  of  the  things  that 
go  to  make  relations  in  industry  better,  unless 
the  base  wage — the  wage  that  any  one  who  is 
willing  to  work  can  earn — at  least  covers  the 
cost  of  living  through  the  full  year. 

And,  naturally,  this  involves  hiring  and  firing. 
Indiscriminate  firing  for  petty  causes  by  angry 
foremen  will  undo  the  best  of  policies  promul- 
gated by  the  management,  for  the  effect  is  pre- 
cisely the  same  as  laying  off  men  because  of 
seasonal  production.  I  have  found  that  many 
demands  for  what  seemed  to  be  exorbitant 
wages  rested  solely  upon  the  fact  that  the  fore- 
men thought  it  was  good  discipline  to  put  the 
*  *  fear  of  God ' '  into  them  by  frequent  and  abusive 
firing.     In  one  large  plant  where  the  production 


Harnessing  the  Creative  Instinct      89 

of  a  department  had  fallen,  an  investigation 
showed  that  the  tactics  of  the  foreman  were 
wholly  responsible :  he  had  considered  it  part  of 
his  duty  to  fire  a  man  or  two  each  day,  whether 
or  not  an  offense  had  been  committed. 

It  will  have  been  apparent  by  this  time  that 
the  foundation  upon  which  the  instincts  of  good 
workmanship  rest  is  made  up  largely  of  things 
that  the  workers  themselves  are  in  the  best  posi- 
tion to  supply.  The  single  point  that  is  exclu- 
sively for  the  management  is  the  provision  of 
work  the  year  round.  In  the  other  affairs  the 
workers  are  in  a  position  to  satisfy  themselves 
as  none  others  can. 

It  is  for  these  reasons  that  a  measure  of  self- 
government  in  a  factory  produces  results  that 
seem  out  of  all  proportion  in  the  comparatively 
few  changes  which  such  government  really 
brings.  One  man  who  has  experimented  with 
forms  of  self-government  in  factories  through 
many  years  goes  so  far  as  to  state  these  four 
propositions : 

^'(1)  That  wages  alone  are  not  enough  to 
hold  men  and  to  induce  them  to  do  their  best 
work. 

''(2)  That,  in  addition  to  wages  sufficiently 
large  to  permit  workers  to  live  comfortably, 


90     When  the  Workmen  Help  You  Manage 

they  must  have  some  interest  in  the  work  apart 
from  the  money  return — a  pride  of  product, 
something  akin  to  the  old  pride  of  craftsman- 
ship.    They  must  have  ideals. 

*'  (3)  That  these  ideals  and  consequent  inter- 
est may  be  created  by  giving  to  the  workers  a 
share  in  the  government  of  the  factory,  in  so 
far  as  it  touches  themselves,  and  ample  political 
machinery  managed  by  them  to  insure  a  univer- 
sal '  square  deal ' — that  is,  they  must  create  for 
themselves  under  supervision  a  kind  of  indus- 
trial democracy. 

''(4)  That  work  interest  can  not  be  had  un- 
der mere  quantity  production,  because  that  is  of 
itself  destructive  of  ideals.  Quality  must  come 
first.     Then  quantity  will  care  for  itself.'* 

Sidney  Webb,  the  English  authority  upon 
many  industrial  matters,  has  this  to  say  along 
the  same  lines  (he  is  speaking  of  English  in- 
dustry) : 

**You  must  not  dream  of  taking  a  single  step 
in  the  direction  of  scientific  management  until 
it  has  been  very  elaborately  explained  to,  and 
discussed  by,  not  only  the  particular  men  with 
whom  you  are  going  to  experiment,  but  also  by 
the  whole  workshop.     It  will,  if  you  handle  it 


Harnesmng  the  Creative  Instinct      91 

with  any  competence,  be  a  matter  of  intense  in- 
terest to  them. 

*'You  must  talk  to  them  both  publicly  and 
privately,  with  magic-lantern  slides  and  experi- 
mental demonstrations,  answering  endless  ques- 
tions and  patiently  meeting  what  seem  to  you 
frivolous  objections.  The  workshop  committee 
or  the  shop  stewards  will  naturally  be  the  tirst 
people  to  be  consulted. 

''Remember,  it  is  the  men's  working  lives 
(not  your  own  life)  that  you  are  proposing  to 
alter,  and  their  craft  (not  yours)  that  you  may 
seem  to  be  going  to  destroy.  You  will  be  mak- 
ing a  ruinous  blunder,  fatal  to  the  maximum 
efficiency  of  the  works,  if  you  content  yourself 
with  bribing,  by  high  rates,  bonuses,  or  rewards, 
just  the  few  individual  men  whom  you  propose 
to  put  on  the  new  system,  whilst  leaving  the 
opinion  of  the  rest  of  the  staff  sullenly  adverse. 
The  others  will  not  be  appeased  merely  by  the 
fact  that  a  few  selected  men  are  making  'good 
money'! 

"And  you  must,  of  course,  make  it  clear  in 
some  way,  to  your  own  men  as  well  as  to  the 
trade-union  concerned,  that  what  you  are  pro- 
posing to  introduce  will  not  merely  pay  the  first 
lot  of  selected  workmen,  and  not  merely  the 


92    When  the  Workmen  Help  You  Manage 

present  generation,  but  also  will  have  a  good 
influence  on  the  prospects  of  the  whole  staff, 
and  will  not  have  any  adverse  effect  on  the 
standard  rate,  now  or  hereafter.  Unless  you 
can  demonstrate  this — unless  you  in  some  way 
automatically  protect  the  piece-work  rates  from 
being  'cut'  at  some  future  time — possibly  by 
some  future  manager — you  will  be  met  (and  in 
the  national  interest  you  ought  to  be  met)  with 
unrelenting  opposition;  and,  if  you  impose  the 
change  by  force  or  by  individual  bribery,  you 
will  inevitably  encounter  the  reprisals  of  'ca'- 
canny. '  "  ^ 

Shop  representation  goes  into  many  phases 
of  industry  other  than  wages,  and,  in  fact,  after 
the  first  few  meetings  wages  form  an  unimpor- 
tant part  of  the  business  of  the  meetings  be- 
cause of  the  feeling  that  the  wages  as  paid  are 
just  or  the  representatives  would  recommend 
changes.  Frequently,  when  an  employer  pays 
a  bonus  or  raises  wages,  he  only  serves  to  prove 
to  the  men  what  they  had  already  thought: 
"The  old  man  could  have  paid  higher  wages 
long  ago,  and  he's  been  skinnin'  us  all  this 
time." 

1  Ca'canny :  A  word,  probably  of  Scotch  derivation,  used  to 
denote  what  is  sometimes  called  "the  strike  on  the  job,"  or 
the  "silent  strike." 


Harnessing  the  Creative  Instinct      93 

But  it  is  different  when  the  workers  get  the 
facts  for  themselves.  Therefore,  taking  my 
own  experience  and  the  experience  of  many 
others  as  a  guide,  I  can  say  that  the  question  of 
base  living  wages  can  seldom  be  settled  by  the 
employer  alone;  for,  no  matter  what  wage  he 
pays,  it  will  seem  small  to  men  who  regard  him, 
rightly  or  wrongly,  as  profiteering  out  of  their 
services.  One  may  rail  about  the  injustice  of 
such  views,  but  is  it  not  far  more  sensible  to 
accept  the  facts  and  apply  a  remedy  based  on 
what  is,  instead  of  on  what  you  think  ought  to 
be? 

In  representation  are  satisfied  the  instincts  of 
self-preservation,  of  possession,  and  of  asser- 
tiveness ;  and  all  of  these  find  expression  in  more 
intelligent  work,  and  in  that  attitude  of  working 
with,  which  is  so  powerful,  when  attained,  that 
the  organization  which  has  it  can  do  almost  any- 
thing. All  of  these  things  combine  to  make  the 
employee  feel  that  the  work  is  his  work  and 
that  out  of  it  he  will  get  the  benefit  he  deserves 
in  the  degree  that  he  deserves. 

But  the  employer  instantly  rejoins :  ''Is  not 
my  business  mine,  to  do  with  as  I  like?  If  I 
give  representation,  do  I  not  in  effect  say  that 
people  who  have  nothing  at  stake  can  run  it  for 
me?" 


94     When  the  Workmen  Help  You  Manage 

In  the  bigger  view  no  business  is  a  personal 
asset  to  do  with  as  one  likes.  But  that  is  be- 
side the  question,  for  what  we  are  now  consider- 
ing is  making  business  a  success.  It  is  the 
right  of  every  man  to  ruin  his  fortunes  if  he 
likes.  But  it  is  not  my  thought  to  help  in  that 
process. 


CHAPTER  V 

MAKING  THE  WORKMAN   PROUD  OF   HIS  JOB 

The  creative  instinct — which  makes  work  a 
pleasure — is  by  no  means  dead  in  American  in- 
dustry. But,  except  in  a  few  plants,  it  exists 
rather  by  accident  than  by  design,  because  the 
idea  that  there  is  such  a  thing  as  the  instinct  to 
create  is  laughed  away  as  impractical  by  many 
plant  managers.  Most  of  us  are  very  backward 
in  the  study  of  the  human  equation,  and  there- 
fore don't  realize  that  by  stimulating  the  crea- 
tive instinct  we  can  solve,  to  a  great  degree,  the 
so-called  labor  problem. 

Take  the  accidental  development.  A  large 
saw-works  in  this  country  prides  itself  upon 
the  quality  of  its  saws.  The  business  ideals 
have  come  down  from  father  to  son  through 
about  a  century ;  they  would  rather  shut  up  shop 
than  make  an  imperfect  saw.  The  founder  was 
an  expert  saw-maker,  and  his  ideals  have  lived 
through  the  generations.  All  of  his  direct  de- 
scendants are  saw-makers.  With  one  excep- 
tion, the  company  has  never  had  an  ofl&cer  out  of 

95 


96     When  the  Workmen  Help  You  Manage 

the  family,  and  every  one  of  the  officers  has 
served  an  apprenticeship  of  from  five  to  ten 
years  in  the  shops — and  this  in  spite  of  the  fact 
that  to-day  the  family  fortunes  run  into  the  mil- 
lions. 

That  company  has  practically  no  casual  work- 
ers and  no  labor  turnover.  Just  as  son  suc- 
ceeds father  in  management,  so  son  succeeds 
father  in  the  shops.  You  can  find  three  genera- 
tions of  the  same  family  in  that  shop.  They  are 
proud  to  work  there. 

But  this  company  has  none  of  the  modem 
ideas  of  labor  management.  They  have  no 
labor  experts,  no  welfare  work,  and  they  do  not 
pay  as  high  wages  as  many  other  shops.  Why, 
then,  are  these  jobs  so  sought  after!  Why  is 
there  no  department  for  hiring  and  firing? 
Why  should  the  fact  of  a  man  leaving  (and  they 
employ  about  thirty-five  hundred  men)  be  so 
notable  as  to  demand  the  personal  attention  of 
the  president? 

Simply  because  there  has  been  developed  a 
pride  in  work  which  holds  the  interest:  those 
men  want  to  make  good  saws,  and  they  consider 
the  making  of  good  saws  as  the  biggest  thing 
they  can  do.  If  a  saw  is  turned  back  on  final 
inspection,  they  want  to  know  why — for  that  is 
a  reflection  upon  their  ability  as  saw-makers. 


Making  the  Workman  Proud  of  His  Job     97, 

They  are  treated  fairly  and  paid  fairly ;  they 
know  that  is  so,  because  most  of  them  know  the 
officers  and  call  them  by  the  first  name,' because 
they  have  worked  in  the  same  shop  and  possibly 
at  the  same  bench.  There  has  never  been  a 
strike.  When  the  war  drove  up  prices,  the 
company  increased  wages  according  to  the  in- 
crease in  the  cost  of  living,  and  did  so  without 
being  asked.  It  pays  through  fifty-two  weeks 
in  the  year. 

When  a  man  gets  into  trouble,  some  member 
of  the  company  will  probably  hunt  him  up  and 
offer  him  what  money  ho  needs — on  a  purely 
personal  basis,  just  as  any  other  friend  who 
happened  to  be  in  funds  would  do.  There 
is  no  investigation,  no  note-signing.  When 
a  man  gets  too  old  to  work,  he  retiree  on  a 
pension  or  takes  a  supernumerary  job  about 
the  place.  There  is  no  pension  system  and  no 
formality;  everything  is  done  in  a  matter-of- 
fact  way  without  the  company  taking  pains  to 
show  that  it  is  a  good  emploj^er  or  the  employee 
feeling  that  he  is  getting  anything  more  than 
he  deserves. 

Of  course,  this  ideal  situation  is  not  to  be 
achieved  by  the  ordinary  company,  which  has 
not  the  years  of  traditions  and  the  continuity  of 
management  behind  it ;  but  if  we  reduce  the  case 


98     When  the  Workmen  Help  You  Manage 

to  its  elements,  these  personal  factors  are  not 
quite  so  important  as  at  first  they  seem  to  be. 
Others  may  consciously  put  into  practice  just  as 
successfully  the  principles  that  in  the  saw- works 
more  or  less  unconsciously  came  into  being. 
Look  at  these  principles  in  the  light  of  what  we 
know  of  the  psychology  of  the  workers : 

(1)  The  workers  are  relieved  of  economic 
fear  by  being  paid  the  year  round;  they  are 
advanced  on  merit  and  retired  on  pension  at  the 
end  of  their  working  days. 

(2)  The  wages  they  receive  are  neither  high 
nor  low,  but  are  on  a  fair  basis  of  performance ; 
likewise,  the  working  conditions  are  above  the 
average,  but  not  in  any  way  what  might  be 
called  ''fancy."  The  men  are  satisfied  with 
both  wages  and  working  conditions  because  they 
have  the  individual  right  to  go  straight  to  the 
officers  if  the  wages  do  not  satisfy  them  and  to 
talk  over  amounts  on  a  man-to-man  basis. 
They  are  content  with  working  conditions  be- 
cause they  have  seen  the  owners  and  the  sons 
of  the  owners  working  for  years  under  exactly 
the  same  conditions. 

(3)  The  wages  and  the  conditions  of  work 
being  disposed  of,  they  are  free  to  exert  creative 
effort.     They  must  exhibit  craftsmanship,  and 


Making  the  Workman  Proud  of  His  Job     99 

they  do  exhibit  it:  First,  because  they  share 
the  company  standard  that  bad  work  is  a  dis- 
grace. Second,  because  they  have  all  been 
trained  through  every  department  of  the  works, 
and,  although  the  task  they  finally  remain  at  is 
a  repetitive  one,  they  know  the  exact  relation  of 
what  they  do  to  the  quality  of  the  finished  saw. 
Third,  because  of  their  familiarity  with  the 
whole  institution  and  the  interchange  between 
them  and  the  owners,  they  know  the  cost  of  the 
material  with  which  they  work  and  hence  do  not 
waste  it. 

Such  are  the  elements  of  good  work  generally, 
and  they  are  not  peculiar  to  individuals  or  im- 
possible of  attainment  in  any  factory  or  office, 
if  only  they  are  borne  in  mind  and  the  organiza- 
tion directed  toward  their  achievement.  Con- 
versely, the  elements  of  bad  work  are : 

(1)  A  sense  of  economic  insecurity — low  or 
high,  unsteady  wages,  and  frequent  firing. 

(2)  Arbitrary  setting  of  wages  and  imposing 
of  penalties.  It  makes  little  difference  in  re- 
sult whether  the  arbitrary  actions  are  just  or 
unjust. 

(3)  Lack  of  a  standard  of  product. 

(4)  Lack  of  knowledge  of  the  place,  and  the 


100     When  the  Workmen  Help  You  Manage 

effect  of  the  particular  operation  in  the  whole 
scheme  of  fabrication. 

(5)  Lack  of  knowledge  of  the  cost  of  the  ma- 
terial that  is  being  used. 

In  the  factory  with  intricate  subdivision  of 
labor  and  standardization  of  operations  (and  it 
is,  as  a  rule,  in  such  factories  that  labor  turn- 
over is  the  highest)  one  seldom  finds  the  least 
recognition  of  the  above  principles,  and  there- 
fore it  is  not  surprising  that  the  workers  come 
to  think  of  their  jobs  as  a  kind  of  servitude,  to 
be  borne  only  until  freedom  is  offered. 

An  officer  of  one  of  the  international  unions 
has  this  to  say  of  his  own  experience : 

''Is  it  not  true  that  the  industrial  evolution 
which  has  brought  the  trusts  into  existence  has 
been  the  means  of  eliminating  the  'human  touch' 
in  industry?  During  the  days  of  small  indus- 
trial plants,  the  employer  and  the  employee,  of 
course,  were  really  fellow  workmen.  At  the 
present  time,  however,  the  employee  has  per- 
haps never  seen  any  of  the  stockholders  of  the 
industrial  plant  where  he  is  employed.  .  .  . 

"When  I  worked  in  the  factories,  which  I  did 
from  the  age  of  twelve  to  twenty-five,  one  of  the 
things  I  found  the  most  dissatisfaction  with  was 
the  deadening  sameness  of  the  work.    I  never 


Making  the  Workman  Proud  of  His  Job     101 

remember  a  time,  when  working  in  tlie  factories, 
that  I  became  so  interested  in  my  work  that  I 
did  not  long  for  quitting  time  to  come.  After 
leaving  factory  work  I  got  a  job  with  a  building 
contractor.  As  I  became  more  proficient  as  a 
carpenter,  I  have  time  and  again  been  put  doing 
certain  work  that  was  more  or  less  creative,  in 
which  I  became  so  interested  that  I  paid  no 
attention  to  quitting  time  and  have  worked  for 
two  or  three  hours  after  the  time  when  I  might 
have  quit  work.    There  is  joy  in  creative  work. ' ' 

That  letter  was  written  to  Mr.  E.  B.  Wolf, 
who  has  made  a  very  extensive  study  of  the  cre- 
ative faculty  of  men.  In  a  paper  read  before 
the  meeting  of  the  A.  S.  M.  E.  in  December, 
1918,  he  gave  these  conclusions : 

"Production  means  creation,  and  the  indus- 
trial creative  function  in  man  is  a  mental  proc- 
ess and  lies  in  his  intelligent  adaptation  of 
means  to  ends.  It  is  useless,  therefore,  to  look 
for  real  creative  work  unless  the  workman  has 
a  chance  to  think  and  to  plan;  any  other  work- 
ing environment  either  fails  to  attract  or  ac- 
tually repels  the  workman,  and,  as  a  conse- 
quence, offers  no  incentive  to  increased  effort. 
Work  which  does  not  call  for  thoughtful  reflec- 
tion and  which  uses  only  muscular  effort  tends 
to  draw  man  down  to  the  level  of  the  brute  and 


102     When  the  Workmen  Help  You  Manage 

makes  for  industrial  irresponsibility  and  conse- 
quent social  disorganzation.  The  unthinking 
man  can  not  be  a  responsible  man." 

The  distinguished  investigator,  Helen  Marot, 
in  her  book  upon  creative  work  says :  ' '  All  pro- 
ductive force  is  artificially  sustained  which  is 
not  dependent  on  men's  desire  to  do  creative 
work. ' ' 

Look  into  your  own  case.  Most  of  us  have  at 
one  time  or  another  had  work  to  do  that  did  not 
require  creative  effort.  Perhaps  you  will  think 
of  motions  repeated  over  and  over  in  a  gymna- 
sium, or  perhaps  you  will  think  back  to  the  day 
when  you  had  a  cord  or  two  of  wood  to  saw.  A 
task  to  be  done  that  calls  forth  no  ingenuity, 
simply  muscular  effort,  is  never  interesting.  It 
is  done  if  it  must  be,  but  quitting  time  is  always 
welcome. 

In  other  words,  men  are  listless  and  indiffer- 
ent— leaving  when  and  as  they  like — only  be- 
cause the  work  holds  no  interest  for  them ;  it  is 
not  theirs  and  they  have  no  part  in  it.  How, 
then,  can  they  be  given  an  interest  ? 

First,  they  can  not  be  given  an  interest 
through  any  set  of  tricks  or  superficial  improve- 
ments. A  bird  in  a  gilded  cage  is  just  as  un- 
happy as  a  bird  in  a  rusty  cage.  That  is  why 
welfare  work  so  often  fails. 


Making  the  Workman  Proud  of  His  Job     108 

That  which  is  fundamental  is  absolute 
straightforwardness  in  every  relation  between 
the  owner's  representatives  and  the  employees. 
The  slightest  suspicion  that  they  are  being 
''handed  something  soft"  destroys  the  atmos- 
phere of  mutual  purpose  without  which  work 
can  not  be  interesting.  The  pay  must  be  ade- 
quate; that  I  have  already  touched  upon  and 
will  take  up  more  fully  farther  on.  And,  finally, 
it  is  necessary  that  the  company  itself  should 
have  a  pride  of  product,  with  standards  that 
are  insisted  upon.  Without  work-pride  at  the 
top,  there  can  be  none  at  the  bottom. 

With  such  an  approach,  it  is  easy  to  interest 
the  employees  by  giving  them  a  measure  of 
autonomy  in  such  matters  as  affect  them — 
wages,  hours,  inspections,  conditions  of  work, 
and  all  penalties.  This  may  be  done  in  several 
ways,  and  is  best  accomplished  a  step  at  a  time. 
The  best  plan  is  to  be  arrived  at  only  by  close 
study,  and  it  would  be  most  unwise  to  adopt  any- 
thing in  the  nature  of  a  system  or  to  stand  or 
fall  upon  the  results  of  a  completely  arranged 
plan.  Human  relations  are  fluid,  and  they  are 
not  to  be  regulated  by  hard-and-fast  plans. 

In  some  instances  an  association  of  the  em- 
ployees, with  an  elected  president  and  officers, 
has  been  most  successful  in  settling  all  disputes 


104     When  the  Workmen  Help  You  Manage 

and  promoting  order  and  company  spirit,  A 
somewhat  simpler  method  is  the  shop  commit- 
tee, elected  by  the  workers  to  act  as  representa- 
tives to  the  company  and  to  hear  and  decide  all 
disputes.  Another  plan  which  has  had  great 
success  is  to  organize  the  workers  on  the  lines 
of  the  United  States  Government:  the  executive 
oflBcers  become  the  Cabinet,  the  foreman  and  de- 
partment heads  are  the  Senate,  and  the  House 
of  Eepresentatives  is  elected  by  the  workers 
according  to  departments. 

In  all  of  these  plans  the  meetings  are  held  dur- 
ing work  hours  and  on  company  time.  Any  plans 
that  provide  for  meetings  outside  of  company 
time  usually  fail,  for  workers  are  not  yet  trained 
to  the  point  where  they  will  give  up  leisure  to 
the  consideration  of  company  business.  Prob- 
ably at  some  later  stage  of  development  this  will 
come  about,  for  the  men  will  not  then  distin- 
guish between  their  own  and  the  company's 
time;  but,  since  we  are  dealing  with  facts  and 
not  with  untried  ideas,  we  must  face  them. 

The  time  spent,  however,  is  far  from  lost. 
Judging  by  results,  most  employers  could  afford 
to  pay  triple  rates  for  the  good  accomplished 
by  the  men  at  these  meetings.  In  them  they 
discover  what  the  company  is  aiming  at,  what 
are  the  trials  and  what  the  rewards.    In  short, 


Making  the  Workman  Proud  of  His  Job     105 

they  become  in  a  way  co-managers,  and  with 
responsibility  naturally  comes  knowledge ;  they 
partake  of  the  ideals,  and  spread  those  ideals  to 
their  fellows.  If  the  employer  does  not  happen 
to  have  ideals — why,  that  is  another  matter. 

Having  a  constructive  end  in  view,  the  work 
takes  on  a  different  character — ^it  becomes  some- 
thing to  be  done  well  and  not  something  to  spin 
out  for  the  money  that  is  in  it.  The  men  are 
anxious  to  know  the  best  way  to  do  their  work ; 
every  artisan  is  anxious  to  improve  himself — 
the  number  who  attend  night  schools  or  take 
correspondence  courses  proves  that.  When 
improvements  in  ways  and  means  are  suggested 
for  the  discussion  of  their  representatives,  then 
that  which  is  called  "scientific  management" 
takes  on  a  new  aspect.  Usually  it  is  not  scien- 
tific; it  becomes  truly  scientific  when  it  works 
with  and  by  the  individual. 

In  one  shop  in  the  Middle  West  where  there 
is  a  large  measure  of  self-government,  the  em- 
ployees voted  to  retain  an  expert,  and  later  they 
posted  a  sign  announcing  that  they  were  all 
''efficiency  engineers"  themselves!  Acting  on 
that  principle,  they  have  each  studied  their  job 
in  the  light  of  the  best  practice ;  and  as  a  result 
that  factory,  with  an  actual  decrease  in  the  num- 
ber of  men  working  and  without  additions  to 


106    When  the  Workmen  Help  You  Manage 

equipment,  has  more  than  doubled  its  output. 

Boys  and  men  will  spend  hours  in  the  study 
and  practice  of  new  formations  and  tricks  in 
baseball  and  football  because  they  have  the  will 
to  win;  they  will  do  exactly  the  same  thing  in 
the  shop  if  they  have  the  will  to  succeed,  and 
will  welcome  the  industrial  engineer  with  all  the 
eagerness  that  a  college  team  welcomes  its  foot- 
ball coach. 

They  find  interest  in  new  methods.  There 
are  few  more  engrossing  studies  than  the  time 
and  manner  of  motions.  I  have  seldom  met 
with  a  workman  who,  knowing  what  it  was  all 
about,  did  not  have  intelligent  pointers  to  offer 
while  he  followed  the  timing  operations ;  but  to 
the  worker  who  does  not  understand,  and  who 
feels  that  his  best  interests  are  opposed  to  those 
of  the  management,  a  time  study  is  but  the 
measurement  for  a  uniform  in  which  to  bury  his 
individuality,  and  he  puts  a  decided  ''reverse 
English ' '  on  his  cooperation. 

There  is  no  mystery  in  a  time  study:  it  is 
made  for  the  purpose  of  discovering  which  mo- 
tions are  essential  and  which  are  not.  In  the 
long  run  the  worker  and  the  manufacturer  are 
paid  only  for  essential  motions;  these  are  the 
only  ones  that  result  in  production.  Unessen- 
tial motions  show  some  day  in  the  company  bal- 


Making  the  Workman  Proud  of  His  Job     107 

ance  sheet,  just  as  padded  expense  accounts 
some  day  show  in  the  salesman's  record;  there 
is  no  dodging  them.  Waste  always  shows  up 
in  the  end. 

The  ideal  industrial  management  situation  is 
one  in  which  the  outsider  comes  in  only  to  give 
a  newer  viewpoint  and  to  teach  from  out  of  his 
broader  experience.  His  object  should  be  to 
teach,  and  when  he  goes  he  should  be  able  to 
leave  behind  him  pupils  who  are  fit  to  teach 
others.  A  really  good  man  will  instal  little ;  he 
will  rather  suggest  to  willing  pupils  who  will  do 
the  installing  themselves.  A  good  artist  trav- 
els across  the  seas  to  gain  the  criticism  of  a 
master;  a  good  worker  will  be  just  as  eager  to 
have  outside  criticism,  and  if  he  is  not  eager,  it 
is  probably  because  he  does  not  understand  the 
true  significance  of  it  all — he  has  not  been  let 
into  a  share  of  the  enterprise.  By  ''share"  is 
not  always  meant  a  share  of  the  profits,  though, 
in  some  fashion,  that  is  ultimately  desirable. 

To  let  him  into  such  a  share  he  must  know 
exactly  what  he  is  doing  and  what  relation  he 
bears  to  the  finished  product.  Standardization 
up  to  a  point  has  come  to  stay;  there  is  no  turn- 
ing backward  to  individual  handicraf  tsmanship ; 
but  there  is  a  way  possible  to  humanize  stand- 
ardized work. 


108     When  the  Workmen  Help  You  Manage 

One  of  the  steps  is  to  let  a  man  know  the  cost 
of  what  he  is  doing  and  to  give  him  an  incentive 
to  keep  down  that  cost  to  the  lowest  point  con- 
sistent with  good  work.  When  one  foreman 
was  given  a  sheet  showing  the  cost  of  the  sup- 
plies consumed  each  month,  he  cut  down  the 
total  from  four  hundred  dollars  to  two  hundred 
and  fifty  dollars  a  month — things  had  been 
wasted  simply  because  no  one  knew  what  they 
were  worth. 

In  one  factory  repair  charges  formed  a  very 
considerable  part  of  the  overhead  expense;  re- 
pairs were  done  leisurely  and  with  much  **  sol- 
diering." A  monthly  cost  sheet  showed  the 
foreman  beyond  question  that  this  wasted  time 
increased  the  overhead  burden  of  his  own  de- 
partment and  brought  the  departmental  costs 
up  to  an  unnecessarily  high  figure. 

The  foreman  had  not  previously  realized  that 
all  these  apparently  little  wastes  had  to  be 
charged  somewhere;  but  when  those  expense 
sheets  bega'n  to  come  around  to  him  at  the  end 
of  every  month  the  repair  bills  were  more  than 
halved. 

Employers  do  not  always  realize  that  waste  of 
supplies  and  materials  frequently  springs  from 
an  astounding  lack  of  knowledge  of  what  they 
are  worth. 


Making  the  Workman  Proud  of  His  Job     109 

Sometimes  the  values  are  brought  home  by, 
in  effect,  selling  the  material  to  the  workers  at 
a  price  that  permits  them  to  make  money  if 
economy  is  used,  but  which  will  cut  into  their 
own  money  if  they  are  wasteful.  Take  a  cer- 
tain gang  of  men  who  were  soldering  tin  cans. 
Solder  is  expensive ;  yet  these  men  ** slobbered" 
it  about  to  such  an  extent  that  they  were  using 
from  eleven  to  nineteen  ounces  per  hundred 
cans.  Experiments  showed  that  the  correct 
amount  should  be  something  like  five  and  one 
half  ounces.  The  men  concerned  were  con- 
sulted and  a  deal  made  by  which  they  would 
share  in  the  value  of  the  solder  saved. 

Now  these  men  are  turning  out  more  cans  a 
day  than  they  did  before,  and  they  average  from 
three  to  seven  ounces  of  solder  for  one  hundred 
cans.  The  saving  per  man  is  about  five  hundred 
dollars  a  year — which  is  only  another  example 
of  how  cooperation  between  employer  and  em- 
ployee makes  money  for  both  of  them.  The 
same  plan  has  worked  with  equal  success  in 
operations  involving  the  use  of  sandpaper,  silk 
thread  in  a  sewing-room,  ink  in  a  printing-shop, 
ribbon  on  hats,  brass  wire  in  electrical  work, 
and  so  on. 

A  somewhat  more  elaborate  idea  is  to  give  a 
foreman  daily  cost  sheets  on  the  work,  together 


110     When  the  Workmen  Help  You  Manage 

with  comparisons  showing  what  the  work  has 
previously  cost.  The  workers  are  intensely  in- 
terested in  these  costs — more  especially  if  they 
are  put  in  graphic  f«orm — and  will  make  a  game 
out  of  beating  former  cost  records.  In  one 
paper-mill  repair  costs  were  more  than  cut  in 
half  by  this  method,  and  in  a  shipbuilding  plant 
where  chaos  had  formerly  been  supreme  and 
costs  running  amuck,  this  simple  sharing  of 
knowledge  brought  down  operations  to  a  work- 
manlike basis — and,  what  is  more,  reduced  the 
labor  turnover  marvelously. 

I  have  spoken  of  the  saving  in  dollars  due  to 
the  worker's  knowledge  of  cost;  but  that  saving 
is  really  not  at  all  the  most  important  feature — 
although,  unfortunately,  it  is  the  phase  that 
might  appeal  first  to  the  employer.  The  big 
thing  about  cost  knowledge  is  that  it  takes  the 
nonotony  away  from  work  and  makes  each  oper- 
ation, or  series  of  operations,  a  subject  for  the 
exercise  of  intelligence. 

The  saving  of  money  is  simply  one  of  the  in- 
evitable results  of  stimulating  the  spirit  of  real 
workmanship.  A  good  worker  never  wastes; 
by  the  same  token,  the  man  who  makes  a  point 
of  not  wasting  becomes  a  real  worker. 

Knowing  the  costs  is  a  step  in  the  direction  of 
becoming  master  of  the  job — that  is,  of  the  ma- 


Making  the  Workman  Proud  of  His  Job     111 

chine  and  the  material.  In  comparatively  sim- 
ple manufacturing  it  may  be  that  the  only  steps 
required  for  the  other  operations  in  the  factory 
are  so  few  that  any  worker  knows  his  relation 
to  the  whole.  But  most  manufacturing  has  so 
many  and  such  varied  processes  that  the  indi- 
vidual worker  does  not  know  what  kind  of  a  link 
he  is  in  the  chain  of  fabrication. 

To  show  him  is  a  very  difficult  problem  where 
the  subdivision  of  labor  is  great,  or  where  he 
deals  with  forces  rather  than  tools — as  when  he 
uses  heat.  In  every  job  of  that  sort  the  worker 
needs  some  record  of  quality  or  uniformity 
which  can  satisfy  the  creative  spirit  that  the 
work  itself  can  not  satisfy.  Each  job  requires 
special  treatment,  but  the  same  principles  run 
through  all.  You  will  note  that  I  say ' '  quality ' ' 
or  *' uniformity"  record.  A  quantity  record  is 
worse  than  useless,  because  production  alone  is 
not  a  stimulus  to  good  workmanship,  but  is  in 
fact  opposed  to  it ;  for  it  springs  from  a  desire 
to  make  money  and  not  from  a  desire  to  do  good 
work. 

A  concrete  example  of  what  quality  records 
mean  is  also  given  by  Mr.  R.  B.  Wolf  out  of  his 
experience  in  wood-pulp  paper-making  in  sev- 
eral factories.  An  important  operation  is  the 
"cooking"  of  the  pulp,  and  the  uniformity  of 


112    When  the  Workmen  Help  You  Manage 

the  product  depends  to  a  very  large  degree  upon 
the  ' '  cooking ' '  control.  The  work  had  formerly 
been  governed  by  rule  of  thumb.  It  was  mo- 
notonous and  the  workmen's  interest  seemingly 
could  not  be  enlisted  in  it. 

Mr.  Wolf  arranged  that  weight  and  moisture 
tests  be  taken  frequently  and  the  results  for 
each  squad  plotted  and  kept  on  continuous  exhi- 
bition near  the  machines.  The  men  could  not 
see  what  they  were  doing  by  watching  the  ma- 
chine, but  the  graph  showed  them  exactly  what 
they  were  doing.  In  the  first  month,  taking 
the  standard  as  one  hundred,  they  averaged 
from  seventy-one  per  cent,  to  eighty  per  cent. ; 
but  in  less  than  six  months  they  were  hit- 
ting ninety  per  cent,  and  had  made  a  large  in- 
crease in  the  quantity  of  product.  The  pulp  of 
that  mill  rose  from  a  poor  grade  to  a  special 
standard  of  its  own.  That  increase  in  quality 
was  made  without  financial  incentive  of  any 
kind ;  the  incentive  came  from  the  stimulation  of 
the  desire  to  do  good  work. 

That  is  one  method;  it  is  not  the  only  way. 
A  large  manufacturer  of  velvets  was  troubled 
with  "seconds";  at  times  half  a  million  dollars 
was  tied  up  in  goods  that  contained  weaving 
defects  that  unfitted  them  for  first-grade  sale. 
He  put  the  question  up  to  the  employees  them- 


Making  the  Workman  Proiid  of  His  Job     113 

selves — they  were  organized  on  the  representa- 
tive system. 

The  men  appointed  committees  to  investigate. 
They  made  tests  themselves,  and  they  retained 
experts  from  outside  to  make  other  tests. 
From  time  to  time,  they  told  of  their  work  in 
mass  meetings  and  received  criticisms  and  sug- 
gestions. 

Soon  that  whole  factory  was  after  ''seconds." 
They  improved  machinery,  insisted  on  cleanli- 
ness, and  finally  changed  the  weavers  from  a 
quantity  rate  to  a  quality.  They  have  now  all 
but  cut  out  "seconds,"  and  under  the  quality 
rate  the  weavers  are  not  only  making  more 
money  than  before,  but  they  say  they  are  mak- 
ing it  with  less  effort  than  when  they  tried  solely 
for  quantity.  But  the  quantity  has  also  in- 
creased !  I  have  through  my  associates  secured 
very  similar  results  by  the  use  of  similar  meth- 
ods in  a  plant  making  linoleum. 

Recognition  of  individuality  through  the 
opening  up  of  the  way  to  knowledge  is  the  main- 
spring of  creative  effort.  I  have  not  attempted 
to  sketch  anything  that  approaches  a  system  for 
stimulating  creative  effort,  because  there  can  be 
no  one  all-accomplishing  system,  and  any  one 
who  imagines  that  a  ready-made  plan  can  be 
bought  and  put  into  operation  forthwith  is  cer- 


114     When  the  Workmen  Help  You  Manage 

tain  of  disappointment.  Human  nature  is  not 
adjusted  in  any  such  summary  fashion;  one 
must  study  each  situation  and  then  solve  it  ac- 
cording to  principles. 

The  management  of  the  human  factor  in  in- 
dustry is  so  great  and  comprehensive  a  study 
that  it  can  not  be  dismissed — as  some  would  dis- 
miss it — by  hiring  a  welfare  worker  or  a  per- 
sonnel manager  or  by  adopting  some  quick  and 
easy  system.  The  subject  demands  close  exec- 
utive study,  undertaken  with  an  open  mind  and 
a  keen  desire  to  get  at  the  facts.  It  is  not  a 
topic  on  which  one  can  dogmatize,  for  as  yet  our 
knowledge  is  empirical.  But  as  to  its  impor- 
tance let  me  quote  the  statement  of  an  executive 
who  has  successfully  stimulated  the  creative  in- 
stinct in  his  employees : 

''It  was  found  that  the  happiness  or  unhap- 
piness  of  the  worker  proceeded  out  of  the  work 
he  was  doing.  Hitherto  it  had  been  thought 
that  his  happiness  or  unhappiness  depended 
upon  the  amount  of  pay  he  received  for  his 
work.  It  had  been  tacitly  assumed  that,  how- 
ever degrading  or  brutalizing  the  work  itself 
might  be,  it  could  be  ennobled  by  the  amount  of 
money  paid  for  doing  it.  This  was  now  shown 
to  be  a  mistake. 

''Work  of  a  certain  order,  work  which  exer- 


Making  the  Workman  Proud  of  His  Job     115 

cised  and  developed  the  better  faculties  of  a 
man,  his  imagination,  his  power  of  thought,  his 
emotion,  was  a  source  of  felicity;  work  of  a 
purely  mechanical  kind,  which  exercised  the 
hand  but  not  the  mind,  was  a  source  of  misery. 
Wages,  money,  in  no  way  affect  the  question, 
for  they  do  not  alter  the  character  of  the  work 
itself." 
That  is  not  an  overstatement  of  the  principle. 


CHAPTER  VI 

WHEN   THE   WORKMEN   HELP   TO   MANAGE 

"Let  the  hands  run  the  place?  You  don't 
know  my  crowd.  The  first  thing  they  would  do 
would  be  to  vote  themselves  higher  wages ;  the 
second  would  be  to  vote  still  more  wages,  and 
the  next  would  be  to  vote  to  abolish  work.  The 
Russians  have  nothing  on  the  kind  of  people  we 
have  around  here ! ' ' 

That  is  the  reaction  of  many  employers  to  the 
suggestion  that  their  workmen  be  given  a  voice 
in  the  management  of  the  business ;  and  it  is  a 
perfectly  natural  reaction.  It  is  the  employer's 
money  or  his  friend's  money  that  is  at  stake, 
so  why  should  those  who  have  nothing  to  lose 
have  a  hand  in  the  spending?  But  this  experi- 
ment has  been  made  in  twenty  or  more  concerns 
in  this  country  with  startlingly  good  results. 

To-day  in  America  neither  the  owners  nor 
workers  are,  generally  speaking,  ready  for  an 
entirely  new  relation.  The  workers  are  quite  as 
suspicious  as  the  owners — and  that  is  saying  a 
good  deal. 

116 


When  the  Workmen  Help  IIT 

On  the  whole,  the  workers  are  more  opposed 
to  the  idea  than  are  the  employers,  for  the  fol- 
lowing reasons.  Those  who  have  socialistic 
leanings  are  convinced  that  the  duty  of  the 
worker  is  to  destroy  capital  and  the  wage  sys- 
tem; although  that  view  is  not  quite  so  preva- 
lent here  as  in  England.  Others  feel  that  the 
natural  relation  is  one  of  bargain  and  sale 
through  collective  units,  and  they  fear  that  mu- 
tuality will  destroy  the  unions  and,  in  time,  rob 
the  worker  of  the  victories  he  has  won. 

The  employers  fear  that  mutual  control  will 
do  just  what  the  workers  fear  it  will  not  do — 
and  that  is,  destroy  capital.  Just  at  the  pres- 
ent moment  many  employers  have  nightmares 
in  which  wild-eyed  Bolsheviki  stalk.  To  those 
employers  who  are  afraid  that  a  worker's  gov- 
ernment in  the  plant  will  play  ducks  and  drakes 
with  the  sacred  investment  let  me  commend  this 
warning  by  a  radical  English  labor  man: 

'*  Besides  chaos  there  will  be  deceitful  kind- 
ness, and  wherever  there  is  kindness  in  the  re- 
lations of  Labor  and  Capital  National  Guilds- 
men  should  go  warily;  .  .  .  the  capitalists  are 
busily  at  work  securing  the  foundations  of  a  new 
type  of  wage-slavery.  They  have  discovered, 
to  quote  the  words  of  Mr.  Dudley  Docker,  that 
'it  is  to  the  interest  of  all  employers  to  make 


118    When  the  Workmen  Help  You  Manage 

their  workpeople  happy.'  Their  methods  are 
obvious.  They  intend  to  buy  off  the  leaders, 
and  through  them  the  led,  by  the  offer  of  a  very, 
very  junior  partnership  in  industry. 

**  Through  Industrial  Parliaments,  through 
bogus  workshop  control,  .  .  .  through  joint 
committees  of  every  conceivable  kind,  and, 
above  all,  through  fairly  high  wages  and  com- 
parative security,  the  employers  are  trying  to 
keep  down  the  hostility  between  Labor  and  Cap- 
ital to  them  so  deplorable,  to  us  so  just.  ...  To 
be  kind  and  to  make  your  workers  contented  is 
Capital's  proper  course,  and  were  I  a  capital- 
ist I  would  go  to  any  lengths,  short  of  surren- 
dering my  business,  to  produce  harmony  in  my 
works.  And  the  specifics  I  would  use  would  be 
High  Wages,  Short  Hours,  Workshop  Commit- 
tees, and  Joint  Control.  As  I  am  not  a  capital- 
ist, I  hope  my  advice  will  not  be  taken.  .  .  . 

**I  believe  that  it  is  Labor's  duty  to  make  the 
capitalist  unhappy.  The  more  Labor  succeeds 
in  this  task,  the  more  I  shall  be  pleased.  For 
constant  unhappiness  kills,  and  I  want  Capi- 
talism to  die.  Labor  should  worry  neither 
about  what  the  capitalist  ought  to  do  nor  about 
what  the  State  ought  to  do.  Labor  should  make 
up  its  mind  what  it  wants  to  do — and  then 
doit." 


When  the  Workmen  Help  119 

That  this  labor  leader  should  oppose  mutual- 
ity of  control  as  tending  toward  breaking  down 
the  organization  of  labor  is  quite  justified,  for 
if  the  worker  is  so  placed  that  he  can  secure 
exact  justice  in  his  working  hours  he  will  not 
need  union  help.  Vigilance  committees  are 
most  useful  when  orderly  government  is  back- 
ward, but  they  disappear  when  authority  be- 
comes ordered. 

As  I  see  the  situation,  the  eventual  effect  of 
joint  control  of  industry  will  be  to  break  down 
the  distinction  of  capital  as  master  and  labor 
as  servant,  and  to  establish  in  its  place  equality 
of  opportunity. 

It  is  to-day  generally  recognized  that  no  com- 
pany can  be  managed  by  one  man  if  the  best 
results  are  to  be  achieved.  Hiring  and  firing, 
exact  salaries,  and  other  indicia  of  economic 
dependence  have  to-day  dropped  out  of  the 
higher  reaches  of  industry,  for  the  single  rea- 
son that  they  do  not  produce  results. 

What  mutuality  does  in  the  executive  branch 
of  industry  it  does  in  the  working  section,  and 
the  tendency  will  be  more  and  more  to  recognize 
that  capital  and  labor  are  apart  equally  impo- 
tent, and  hence  that  neither  is  entitled  to  more 
respect  than  the  other. 

But  we  are  concerned  with  eventual  effects 


120     When  the  Workmen  Help  You  Manage 

only  in  so  far  as  we  need  to  know  something  of 
the  terminus  of  the  road  down  which  we  start ; 
we  are  more  intimately  concerned  right  now 
with  what  is  the  present  effect  of  joint  control 
and  what  may  be  expected  of  it. 

This  control,  it  is  well  to  bear  in  mind,  is  only 
a  means  to  an  end  and  not  the  end  itself ;  the  end 
is  to  acquire  an  atmosphere  that  will  permit  cre- 
ative work  by  freeing  the  intelligence  and  the 
persons  of  the  workers  from  repressive  control. 
I  do  not  use  the  word  ' '  repressive ' '  in  any  invid- 
ious sense  as  meaning  ''downtrodden"  or  ''op- 
pressed," but  to  denote  the  condition  of  the 
worker  under  modem  shop  management. 
Through  no  fault  of  his  and  through  no  fault 
of  the  employer,  the  modern  shop  organiza- 
tion does  not  permit  of  individual  expression 
in  the  work  or  the  development  of  individuality 
in  the  workmen. 

Very  astute  employers  keep  sharp  watch  for 
bright  workers  and  speedily  lift  them  into  ex- 
ecutive positions. 

It  is  these  "capable"  men  who  come  to  the 
front  in  any  self-government  scheme;  they  are 
natural  leaders  and  they  hold  leadership  ac- 
cording to  ability.  They  are  equally  potent 
for  construction  or  destruction.  When  given 
power,  do  they  destroy  or  construct? 


When  the  Workmen  Help  121 

That  is  the  question  that  bothers  the  em- 
ployer who  would  like  to  do  something  to  better 
relations,  but  who  is  timid  about  risking  any- 
thing in  particular. 

Let  's  see  how  one  experiment  in  democratic 
government  of  business  worked  out.  In  the 
Filene  Store,  in  Boston,  the  Cooperative  Asso- 
ciation to  all  intents  and  purposes  regulates 
wages,  hours,  and  conditions  of  work.  The  em- 
ployees act  through  committees,  the  most  im- 
portant of  which  is  the  Arbitration  Committee, 
which  sits  as  a  court  to  hear  disputes  between 
employees  and  the  store. 

The  members  are  all  employees,  elected  by 
secret  ballot,  and  before  them  come  the  com- 
plainant and  the  respondent,  both  represented 
by  counsel  selected  from  the  employees;  they 
hear  testimony  and  then  render  decisions. 
Taking  the  whole  record  of  cases  over  the  years 
that  the  plan  has  been  in  force,  it  will  be  found 
that  the  decisions  against  the  store  and  the 
decisions  in  favor  of  the  store  are  about  equal. 

When  the  Filene  management  asked  the  em- 
ployees to  nominate  a  certain  number  of  their 
fellows  from  whom  directors  of  the  company 
might  be  chosen,  the  first  selections  were  of  the 
firebrand  or  ''hot-air  artist"  type;  but,  after  a 
year  or  two,  the  employees  found  that  such  men 


122    When  the  Workmen  Help  You  Manage 

talked  much  and  did  little,  and  they  then  turned 
to  men  of  the  character  that  the  existing  di- 
rectors would  themselves  have  chosen. 

In  all  the  years  of  the  Filene  plan,  the  em- 
ployees have  never  once  attempted  to  take  an 
unfair  advantage  or  to  try  anything  that  might 
be  termed  a  ''hold-up."  The  corporation  man- 
agers have  absolute  confidence  in  the  integrity 
and  judgment  of  their  employees. 

Edward  A.  Filene  ascribes  much  of  the  suc- 
cess of  the  adventure  to  the  fact  that  the  line  of 
demarcation  between  employers'  and  employ- 
ees' authority  is  hazy.  There  are  no  "No  tres- 
pass" signs;  no  subject  is  forbidden  to  the  em- 
ployees' association  for  discussion;  and,  be- 
cause there  are  no  limits,  there  has  been  no 
trouble  with  trespassing.  The  store  people  in- 
vestigate the  finances  through  a  committee,  and 
have  made  some  excellent  recommendations 
which  the  company  has  adopted. 

But  there  has  never  been  a  clash  of  authority, 
and  it  seems  most  unlikely  that  there  ever  can 
be.  And  as  to  the  intelligence  with  which  finan- 
cial problems  are  met,  I  may  say  that  the  em- 
ployees, in  presenting  the  financial  statement  to 
their  constituents,  adopted  a  simplified  arrange- 
ment which  the  executives  found  so  much  clearer 


When  the  Workmen  Help  123 

than  their  own  that  they  adopted  the  same  ar- 
rangement ! 

I  personally  know  the  facts  or  have  had  inves- 
tigated perhaps  a  score  of  instances  where  ex- 
ceptionally wide  powers  of  authority  have  been 
granted  to  workers,  and  I  have  yet  to  learn  of  a 
single  instance  where  that  authority  has  been 
abused  or  has  been  used  for  any  other  purpose 
than  advancing  the  best  interests  of  both  the 
company  and  the  workers  considered  as  a  whole. 

Sometimes  groups  of  workers  do  try  to  put 
over  higher  wages  than  they  deserve,  but  they 
seldom  try  this  more  than  once,  for  the  workers' 
committees  investigate  such  appeals  carefully 
with  the  aid  of  testimony  that  would  not  be 
available  for  the  employer,  and  they  decide  on 
the  facts.  If  the  appeal  is  unjust  they  do  not 
hesitate  to  say  so  in  their  decision,  and,  where 
such  a  turn-down  by  the  employer  would  mean 
a  strike,  the  workers  will  accept  the  findings  of 
their  own  committees  without  question. 

Their  efforts  are  by  no  means  all  in  the  direc- 
tion of  raising  wages ;  a  number  of  cases  are  on 
record  where  they  have  reduced  rates  because 
improved  methods  made  the  old  rates  too  high ; 
these  reductions  have  been  usually  at  the  behest 
of  the  men  and  not  of  the  company.    How  does 


124    When  the  Workmen  Help  You  Manage 

it  happen  that  members  of  a  union  almost  al- 
ways make  exorbitant  demands  for  wages,  and 
that  the  same  men  acting  in  a  shop  committee 
do  not  make  excessive  demands?  It  does  not 
seem  logical ;  is  this  a  Dr.  Jekyll  and  Mr.  Hyde 
act?  Do  they  receive  the  faith  of  a  new  dis- 
pensation overnight? 

It  is  perfectly  true  that  men  forming  a  union 
committee  will  indorse  the  action  of  a  union 
business  agent  in  demanding  wages  which  they 
know  the  company  can  not  pay,  and  they  will 
take  exquisite  joy  in  adding  petty,  irritating 
demands  apparently  just  for  the  sake  of  making 
them.  It  is  also  perfectly  true  that  those  same 
men,  sitting  as  a  shop  committee  with  full  re- 
sponsibility, will  as  a  rule  quickly  arrive  at  a 
just  wage  and  will  dismiss  every  irrelevant  de- 
mand. 

And  the  reason  is  this.  While  acting  for  the 
union  they  are  against  the  shop  and  trying  to 
drive  the  best  possible  bargain.  They  do  not 
care  whether  the  shop  goes  on  or  goes  down; 
they  are  dealing  with  a  natural  enemy  and  at 
arm's  length.  They  are  not  interested  in  how 
the  company  manages — that  is  the  company's 
affair.  But  take  these  same  men  in  a  shop  com- 
mittee. They  are  charged  with  administering 
exact  justice  between  the  men  and  the  company, 


When  the  Workmen  Help  125 

and  because  they  have  that  responsibility,  they 
will  dismiss  every  consideration  that  might  tend 
to  its  avoidance.  A  few  men  will  be  found  who 
will  toady  to  the  company,  but  they  are  com- 
paratively rare — about  as  rare  as  those  who  will 
toady  to  the  men. 

The  result  of  my  observations  is  that  workers 
under  responsibility  act  just  about  as  other  peo- 
ple do,  and  they  are  neither  more  nor  less  hon- 
est than  the  average  human  being  picked  at  ran- 
dom— and,  unless  one  has  a  mind  to  change  the 
world,  that  is  about  all  that  can  be  expected  of 
anybody.  It  is  a  good  enough  average,  any- 
way. Most  executives  are  content  if  their 
boards  of  directors  measure  up  to  such  stand- 
ards. 

We  are  inclined  to  regard  all  this  mutuality 
of  shop  management  as  something  revolution- 
ary and  fraught  with  unknown  evils.  Presum- 
ably we  have  been  trying  out  the  theories  of 
representative  government  for  some  time  in  tliis 
country — to  be  exact,  since  about  1776 — ^and  we 
are  quite  committed  to  it  both  in  theory  and  in 
practice.  We  do  not  fear  the  votes  of  our  em- 
ployees in  state  and  national  affairs,  and  in  fact 
would  think  that  the  country  was  going  to  the 
dogs  if  universal  suffrage  were  withdrawn. 
Then  why  should  a  factory-owner  fear  the  same 


126     When  the  Workmen  Help  You  Manage 

sort  of  government  in  his  factory?  For  no  rea- 
son in  the  world  except  that  he  does  not  know 
what  it  holds;  he  merely  fears  the  unknown. 

Practically  speaking,  experience  shows  that  it 
is  not  advisable  to  introduce  autonomy  all  at 
once.  It  is  better  to  go  a  step  at  a  time,  for 
the  simple  reason  that  drastic  changes  are  up- 
setting. Neither  employer  nor  employee  is 
quite  ready  to  go  the  whole  distance  from  the 
very  outset,  and  to  put  in  an  entirely  new  foun- 
dation would  be  to  run  the  risk  of  failure  from 
severe  business  indigestion  through  lack  of  as- 
similation. 

It  is  well,  I  find,  to  start  with  a  single  com- 
mittee to  adjust  some  particular  trouble,  and 
then,  keeping  that  committee  standing,  grad- 
ually to  enlarge  its  powers  until  the  time  comes 
for  another  committee.  The  whole  Filene  plan 
grew  out  of  a  dispute  with  a  girl  cashier  over  a 
shortage  for  which  she  claimed  that  she  was  not 
responsible.  She  said  that  any  fair-minded 
outsider  would  agree  with  her,  and  the  store 
manager  took  her  at  her  word  and  selected  an 
umpire.  The  umpire  sustained  the  girl;  and 
from  that  incidental  beginning  grew  the  whole 
of  the  plan  that  is  in  force  to-day. 

It  is  not  necessary  and  it  is  not  advisable, 


When  the  Workmen  Help  127 

unless  a  company  is  face  to  face  with  an  emer- 
gency such  as  a  strike,  to  do  more  than  cut  cor- 
ners at  the  very  start;  and  then  gradually  a 
system  which  exactly  fits  that  shop  will  develop 
in  good  time. 

That  plan  is  strongest  which  has  the  great- 
est elasticity;  therefore  the  design  should  be 
laid  out  in  bold,  free  strokes  and  not  in  detail. 
Definitions  of  jjowers,  exact  procedures,  and  the 
minute  regulations  should  form  no  part  of  the 
eventual  constitution  or  other  instrument  which 
may  be  adopted.  It  is  really  better  to  follow 
the  British  example  and  make  the  constitution 
consist  of  the  body  of  the  laws  and  resolutions 
which  are,  from  time  to  time,  passed.  An  exact 
definition  of  a  power  strikes  some  bumptious 
human  chord  that  makes  exceeding  that  limita- 
tion the  only  act  worth  while ! 

Therefore  it  is  seldom  well  to  ''blue-print" 
the  plan  or  to  issue  a  rule  book  or  otherwise 
spread  out.  The  executives  will  have  to  run  the 
risk  of  having  their  ideas  termed  loose  and  un- 
scientific, and  also  may  cringe  before  complete 
''plans"  and  "systems";  but,  for  all  that  and  in 
spite  of  all  that,  the  controlling  idea  should  be 
to  conform  to  existing  human  nature  and  not 
to  change  human  nature  forthwith  after  the 


128     When  the  Workmen  Help  You  Manage 

manner  of  reformers.  A  lot  of  good  ideas  have 
been  lost  in  the  haste  of  their  attempted  appli- 
cation. 

Where  and  how  to  start  an  installation  de- 
pends entirely  upon  circumstances.  If  a  dis- 
pute happens  to  be  on,  make  that  dispute  the 
subject  for  the  first  committee,  and  take  that 
opportunity  to  say  that  this  committee  is  but 
the  beginning  and  that  you  hope  a  more  com- 
plete working  relation  can  be  evolved  out  of  the 
experience.  Then  ask  the  employees  to  elect 
representatives  to  confer  with  the  executives  on 
important  matters,  and  through  those  represent- 
atives work  out  the  sort  of  organization  that 
seems  to  fit.  Most  shop  committees  will  wel- 
come good  suggestions,  and  it  can  be  taken  al- 
most as  an  axiom  that  a  suggestion  which  a  com- 
mittee refuses  to  adopt  is  not  a  good  one,  and 
that  the  executives  can  deem  themselves  lucky 
that  it  did  not  become  a  rule. 

As  the  organization  grows,  most  of  the  both- 
ersome details  of  shop  management  can  be 
handed  over  to  the  representatives — matters  of 
inspection,  hours  and  conditions  of  work,  man- 
ner of  payment  of  wages,  shop  rules,  welfare 
work,  and,  finally  and  by  degrees,  the  fixing  of 
wages. 

Putting  wages  aside  for  the  moment,  examine 


When  the  Workmen  Help  129 

into  the  working  of  representative  bodies  on 
shop  rules  and  discipline.  Many  managers  in- 
sist on  large  books  of  rules,  and  the  enforcement 
of  these  rules  causes  no  end  of  resentment, 
which  reflects  itself  in  bad  work.  In  practically 
every  plant  where  the  men  are  represented  in 
the  management,  shop  discipline  and  rules  have 
been  put  upon  an  honor  system.  The  rules 
that  serve  no  good  end  are  cut  out,  and  a  few 
broad,  essential  principles  are  lived  up  to  as  a 
matter  of  honor. 

For  instance,  most  shops  have  trouble  in  get- 
ting the  men  at  their  places  readj'  to  work  when 
the  whistle  blows,  and  in  having  them  stay  there 
until  the  quitting  whistle.  In  the  majority  of 
shops  the  stream  of  workers  starts  out  of  the 
gates  within  ten  seconds  after  the  whistle,  which 
means,  of  course,  that  the  men  have  taken  time 
by  the  forelock  and  made  ready  well  in  advance. 

In  one  shop  the  workers'  committee  merely 
posted  a  notice  to  the  effect  that  men  who  did 
not  spend  the  full  time  at  their  work  would  be 
considered  as  in  opposition  to  the  best  interests 
of  the  mass  of  the  employed.  Thereafter  not  a 
worker  was  late  in  starting  or  early  in  quitting, 
excepting  of  course  for  unayoidable  causes. 
Moral  force  is  difficult  to  resist. 

In  another  plant  a  committee  maintains  moni- 


130     When  the  Workmen  Help  You  Manage 

tors  of  its  own,  and  the  names  of  offenders 
against  discipline  are  posted.  Sometimes  the 
committees  have  imposed  penalties ;  but  in  gen- 
eral the  experience  is  that  money  penalties  have 
not  the  same  effect  as  moral  ones.  Moral 
forces  are  seldom  at  the  command  of  the  com- 
pany management,  but  they  form  the  strongest 
weapon  of  the  shop  committee. 

Hours  of  labor  are  frequently  subjects  for 
dispute.  It  does  seem  impossible  that  any  one 
should  accomplish  as  much  in  eight  hours  as  in 
twelve,  but  in  many  lines  of  work  this  is  true 
nevertheless.  In  one  eight-hour  day  a  man  will 
hardly  do  as  mucJi  as  in  one  twelve-hour  day, 
but  he  frequently  will  do  more  in  a  month  of 
eight-hour  days  than  in  a  month  of  twelve-hour 
ones,  for  the  reason  that  the  eight  hours  will 
permit  him  to  keep  the  vigor  that  means  con- 
centration. 

Workers  themselves  are  not  agreed  upon  the 
length  of  the  working  day.  The  basic  eight- 
hour  day  is  not  a  time  but  a  wage  matter,  and 
violates  the  principle  of  short  hours  of  concen- 
trated work.  All  of  the  committees  I  know 
have  discussed  hours  as  affecting  their  own 
work,  with  the  result  that  they  eventually  cut 
down  to  eight  hours,  without  overtime,  except- 
ing in  cases  of  necessity.    More  often  than  not 


When  the  Workmen  Help  181 

they  then  turn  out  more  work  than  under  the 
ten-  or  twelve-hour  plan. 

In  each  instance  the  cutting  of  the  day  has 
been  gradual,  and  because  the  length  of  the  day 
vitally  affects  piece  workers  each  cut  is  small 
and  is  made  the  subject  of  study.  If  the  day 
happens  to  be  eleven  hours,  they  will  usually 
first  cut  to  ten  and  then  tabulate  results.  If 
they  find  that  as  much  work  is  being  done  as 
before  they  will  try  another  cut;  and  so  on 
until  the  day  seems  to  suit.  With  each  cut  they 
put  it  up  to  the  workers  to  decide  how  they  shall 
work,  and  they  let  every  one  know  that  the  suc- 
cess of  the  cut  depends  upon  the  actions  of  the 
people  themselves.  With  this  approach,  the 
workers  usually  find  where  they  have  been  wast- 
ing time  under  the  old  hours,  and  jack  them- 
selves up  for  the  new  schedule. 

Another  committee  that  marks  a  long  step 
forward  is  the  efficiency  committee.  The  very 
word  ''efficiency"  is  anathema  to  the  worker, 
because  he  associates  it  with  grinding,  wearing 
force  that  means  more  dollars  for  the  owner 
and  a  broken  constitution  for  him.  True  effi- 
ciency, of  course,  means  nothing  of  the  sort;  it 
means  the  utilization  of  the  waste  time  and  mo- 
tion, and  is  an  addition  to  the  power  of  the 
worker.     Only  through  the  workervs'  own  gov- 


132    When  the  Workmen  Help  You  Manage 

ernment  can  the  best  efficiency  results  be  ob- 
tained, and  by  enlisting  their  intelligent  help 
the  subject  can  be  made  of  absorbing  interest. 

The  work  of  industrial  or  efficiency  engi- 
neers has  often  been  hampered  by  the  lack  of 
cooperation  on  the  part  of  those  affected — ^the 
natural  feeling  of  resentment  against  being 
forced  to  change  established  practices  without 
knowing  the  reason  why,  and  the  suspicion  that 
the  new  ways  may  be  soul-deadening. 

I  dismiss,  for  the  moment,  the  equally  natural 
suspicion  that  the  efficiency  engineer  is  a  crank ; 
so  many  charlatans  have  found  clients  or  vic- 
tims that  the  name  "^ciency"  has  become  in- 
vidious in  the  extreme.  I  prefer  the  term  "in- 
dustrial engineer,"  and  instead  of  ''efficiency 
practice"  prefer  to  present  the  subject  as  a 
simplification  of  existing  practices — the  lopping 
off  of  the  unnecessary  things.  If  one  presents 
better  industrial  practice  in  this  fashion,  then 
it  takes  on  a  new  and  comprehensible  meaning 
to  the  worker,  and  he  will  evidence  the  same 
interest  in  it  that  he  does  in  the  saving  of  ma- 
terial and  other  phases  that  go  to  the  mastering 
of  a  job. 

The  efficiency  committee  will  not  only  make 
smooth  the  path  to  better  methods,  but  through 
suggestion  systems  and  investigations  of  their 


When  the  Workmen  Help  133 

own  will  often  do  more  toward  real  economy  of 
operation  than  it  is  possible  for  any  profes- 
sional engineer  to  do.  In  one  plant  the  men 
have  themselves  re-designed  nearly  every  ma- 
chine in  the  place,  with  astounding  results  in 
the  way  of  production,  quality,  and  lowering  of 
sales  price,  with  an  increase  of  wages  to  the 
men  and  profits  to  the  company.  In  another 
factory,  within  six  months  from  the  time  the 
workers  were  given  a  voice  in  the  management, 
they  devised  more  improved  machinery  than 
had  been  known  in  that  particular  industry 
within  twenty  years. 

Shop  committees  are  far  better  equipped  to 
deal  with  union  matters  than  are  employers. 
"We  all  like  to  dodge  the  fact  that  unions  exist; 
we  like  to  close  our  eyes  to  the  fact  that  they 
are  growing  and  that  no  manager  can  to-day 
say :  '  *  I  refuse  to  recognize  unions  as  such ;  I 
will  deal  only  with  men  on  the  pay-roll." 
Unions  are  here  and  to  stay,  and  they  grow 
steadily  more  powerful.  It  is  for  the  employ- 
ers to  take  them  as  aids  to  progress  or  as  antag- 
onists. 

Meeting  them  as  antagonists,  fights  and  more 
fights  are  bound  to  occur,  and  each  fight  leaves 
the  corporation  combatant  weaker.  But  there 
can  be  no  antagonism  when  the  corporation  rep- 


IM     When  the  Workmen  Help  You  Manage 

resentatives  appointed  to  deal  with  union  affairs 
are  themselves  union  men,  elected  by  the  body 
of  the  workers  to  preserve  their  own  best  inter- 
ests. 

Take  several  specific  cases.  A  strike  was  or- 
dered in  the  garment  trade  in  a  Middle  Western 
city,  and  every  factory  but  one  closed.  In  that 
one  factory  the  committee  (and  all  its  members 
were  union  men)  stated  that  it  would  not  be 
right  to  penalize  their  fellows  and  employers 
for  the  sins  of  others,  and  they  refused  to  strike 
— and  also  preserved  their  union  standing.  In 
an  iron-working  shop,  the  mass  meeting  called 
by  the  committee  to  consider  the  union  demands 
for  a  closed  shop  voted  against  closure — and 
the  chairman  of  that  meeting  was  president  of 
the  local  union. 

Unions  do  not  all  want  to  fight.  A  few  union 
business  agents  think  that  their  own  jobs  de- 
pend upon  the  amount  of  trouble  they  can  stir 
up,  but,  generally  speaking,  union  workers  do 
not  differ  from  other  workers  unless  they  are 
smarting  under  a  sense  of  injustice,  and  then, 
just  like  other  people,  they  do  want  to  get  back 
at  the  boss.  The  union  tenets  of  closed  shop, 
limitation  of  output,  regulation  of  hours,  and 
the  fixing  of  wages  are  all  part  of  an  economic 
defensive  that  need  not  be  and  is  not  maintained 


When  the  Workmen  Help  135 

when  tlie  reasons  for  it  vanish.  And  under  au- 
tonomous works'  control  the  reasons  do  vanish. 

And  now  for  wages.  In  a  previous  chapter  I 
have  spoken  of  the  limits  of  wages,  and  reached 
the  conclusion  that  wages  are  only  high  or  low 
according  to  the  amount  of  production  they  rep- 
resent. Efficiency  and  wages  are  bound  to- 
gether. Workers  oppose  better  methods  in 
piece-rate  work,  because  better  methods  usually 
mean  lower  rates — they  see  the  boss  getting 
more  for  his  money.  Therefore  they  will  ' '  sol- 
dier" when  rates  are  being  fixed,  and  they  com- 
monly make  the  whole  rate  question  a  kind  of 
''hide-and-seek"  affair. 

This  is  the  big  problem  that  wage  committees 
solve.  They  banish  the  arbitrary  fixing  or 
changing  of  rates  and  insist  upon  just  rates  that 
will  return  wages  commensurate  with  effort. 
They  will  raise  or  they  will  lower  rates,  but  al- 
ways with  an  eye  to  the  results;  they  will  not 
lower  because  a  man  is  making  too  much  money, 
but  they  will  lower  if  he  is  making  more  money 
than  the  amount  of  skill  and  effort  that  he  ex- 
pends deserves. 

If  Smith  makes  just  a  living  wage  at  a  cer- 
tain rate  and  is  a  fair  average  workman,  while 
Brown,  who  is  exceptionally  skilful  and  fast, 
makes  high  pay,  a  committee  is  not  likely  to 


186     When  the  Workmen  Help  You  Manage 

insist  tliat  the  rate  be  cut  to  the  point  where 
BroAvn  can  just  make  a  living  and  Smith  will 
have  to  leave  or  starve.  I  have  considerable 
confidence  that  wage  committees  will,  with  rare 
exceptions,  adjust  wages  and  rates  more  scien- 
tifically and  with  greater  justice  and  satisfac- 
tion to  both  employees  and  employer  than  is  pos- 
sible for  employers  working  through  foremen  or 
superintendents. 

I  have  not  spoken  of  the  composition  of  com- 
mittees or  control  bodies.  Ought  they  to  be  ap- 
pointed or  elected?  Ought  they  to  have  repre- 
sentatives of  the  company,  or  ought  they  to  be 
made  up  solely  from  the  workers  1  Here  again 
circumstances  control  and  developments  gov- 
ern ;  it  will  not  do  to  lay  down  rules.  In  some 
cases,  particularly  in  small  shops,  monthly  mass 
meetings  can  do  most  of  the  work  and  hear  the 
reports  of  committees  of  their  own  appoint- 
ment; in  other  cases  more  elaborate  election 
and  representation  machinery  is  quite  neces- 
sary, and  there  may  be  cases  where  joint 
committees  can  be  appointed.  But  in  general 
I  would  suggest  that  the  best  results  will  be 
had  from  committees  that  are  elected  by  the 
workers  or  appointed  by  bodies  elected  by  them 
and  then  given  complete  responsibility — reserv- 
ing to  the  executives  the  right  of  confirmation. 


When  the  Workmen  Help  IdT 

The  whole  thought  is  toward  spurring  on  the 
freedom  of  intellect  which  will  promote  the  cre- 
ative faculty.  The  democratic  control  is  only  a 
step  toward  realizing  that  freedom.  We  in  the 
United  States  seldom  have  recourse  to  the 
courts ;  we  seldom  have  reason  'to  claim  the  pro- 
tection of  the  Bill  of  Rights ;  but  we  should  feel 
mightily  oppressed  if  any  of  these  rights  were 
taken  away. 

It  is  quite  the  same  with  shop  autonomy.  In 
the  beginning  the  very  novelty  causes  a  lot  of 
litigation  of  various  kinds,  and  complaints  are 
made  from  the  joy  of  having  the  opportunity  to 
make  a  complaint ;  but  that  novelty  soon  wears 
off.  Then  things  run  smoothly  and  the  number 
of  cases  rapidly  decreases ;  most  complaints  are 
settled  at  once  and  without  recourse  to  the  judi- 
cial machinery — it  is  the  sense  of  fairness  that 
is  the  big  moving  feature,  and  not  the  exercise 
of  the  powers. 

Workers  in  shop  self-government  do  not  act 
very  differently  from  the  rest  of  us  under  na- 
tional self-government. 


CHAPTER  VII 

PROVIDING   STEADY   JOBS   FOR   YOUR   MEN 

AiiTHOUGH  perhaps  no  one  is  under  the  neces- 
sity of  living,  even  a  workman,  if  he  is  to  live 
for  long",  must  eat  the  year  round.  And  to  eat 
he  must  work. 

Continuous  employment  is  a  most  important 
element  in  liandling  labor  to  the  greatest  advan- 
tage.    But  apparently  it  is  seldom  realized. 

A  seasonal  business  is  invariably  a  poorly  run 
business.  I  have  never  yet  seen  a  business  that 
could  not  be  put  on  a  year-round  production 
with  profitable  results. 

Seasonal  production  is  more  or  less  the  reflec- 
tion of  the  American  habit  of  taking  things  as 
they  come.  We  are,  in  many  industries,  just 
getting  to  the  point  where  we  no  longer  can, 
because  of  a  large  margin  of  profit,  be  satisfied 
to  take  preventable  losses. 

When  we  reflect  on  the  economic  waste  of 
operating  a  plant  to  capacity  for  half  the  year 
and  then  letting  it  stand  idle  for  the  other  half, 
the  practice  is  properly  classed  as  a  vice.     Like 

138 


Providing  Steady  Jobs  for  Your  Men     189 

all  business  vices,  this  one  has  bad  effects  on 
the  profits,  the  most  outstanding  being : 

(1)  That  seasonal  work  increases  the  selling 
price  by  loading  the  product  with  the  burden  of 
the  idle  plant  hours.  Increasing  the  price  de- 
creases sales. 

(2)  By  making  the  term  of  employment  inter- 
mittent, the  workers  are  made  economically  in- 
secure, and  hence  must  give  their  first  attention 
to  money  instead  of  to  work. 

Take  the  first  proposition.  It  is  self-evident 
that,  if  proper  costs  are  kept,  the  expense  of  an 
idle  plant  must  somehow  be  made  up  by  adding 
it  to  the  selling  price  of  the  product.  Espe- 
cially flagrant  instances  of  this  may  be  seen  in 
the  immense  plants  that  are  sometimes  erected 
to  take  care  of  the  whole  of  a  seasonal  business 
within  a  very  few  weeks.  For  example,  most 
shoe  factories  are  much  larger  than  any  except- 
ing peak  production  demands,  and  many  cloth- 
ing factories  come  under  the  same  head. 

The  sales,  with  this  economic  waste  added  to 
the  price,  are  bound  to  be  smaller  than  if  the 
price  represented  only  material  and  labor  costs 
plus  the  share  of  the  overhead  on  a  fifty-two- 
week  production  basis.    It  is  an  economic  law 


140     When  the  Workmen  Help  You  Manage 

that  the  distribution  of  an  article  is  in  inverse 
proportion  to  its  price.  Ford's  inexpensive 
automobile  is  an  example  of  this.  Year-round 
production  is  one  of  the  reasons  Ford's  over- 
head per  unit  is  small. 

In  a  seasonal  industry  labor  is  almost  sure  to 
be  inefficient  and  disorderly.  A  good  workman 
will  not  voluntarily  take  seasonal  employment. 
If  forced  to  do  so  by  the  pressure  of  the  grocer 
and  landlord,  a  few  experiences  are  apt  to  make 
a  poor  workman  of  him,  if  not  an  active  anti- 
capital  agitator. 

It  is  logical  to  expect  that  industrial  relations 
are  at  their  worst  in  the  seasonal  trades.  It  is 
in  the  building,  garment,  shoe,  silk,  and  cotton 
industries  that  the  greatest  number  of  strikes 
occur.  Seasonal  labor  towns,  like  Paterson, 
N.  J.,  and  Lawrence,  Mass.,  are  usually  hotbeds 
of  disorder.  Aside  from  the  antagonism 
aroused  in  the  men  by  the  injustice  of  being 
throvvai  out  of  work  against  their  will,  there  is 
another  good  reason  for  this:  the  men  are  not 
with  one  concern  long  enough  to  allow  a  real  in- 
dustrial relation  to  take  root. 

If  the  consequences  of  seasonal  production 
are  high  prices,  with  low  profits  and  labor  un- 
rest, then  the  results  of  putting  a  seasonal  in- 
dustry into  the  year-round  class  will  be : 


Providing  Steady  Jobs  for  Your  Men     141 

(1)  To  reduce  tlie  price  of  the  articles  and 
thus  gain  greater  sales  and  larger  profits 
through  a  more  frequent  turnover  of  the  capital 
involved. 

(2)  To  stabilize  the  labor  factor,  and, 
through  cooperation,  gain  a  greater  return  per 
labor  dollar,  which  in  turn  will  permit  the  profit- 
able paying  of  higher  wages  and  the  realization 
of  something  of  the  latent  capacity  of  the 
workers. 

None  of  the  demands  of  labor  is  more  stressed 
than  that  work  shall  be  steady  through  the  whole 
year.  The  individual  employer  conducting 
what  he  thinks  is  a  seasonal  business  may  dis- 
miss unemployment  as  no  concern  of  his;  but 
these  social  matters  are  not  to  be  so  dismissed. 
The  man  who  is  willing  to  work  has  a  right  to  be 
able  to  find  work ;  if  work  is  not  to  be  had,  then 
he  has  a  right  to  look  t-o  the  state  for  support — 
that  is,  in  our  modern  conception  of  society. 
That  support  may  be  given  in  allowances,  as  in 
England,  or  by  the  allocation  of  public  improve- 
ments to  dull  seasons.  It  will  be  given  in  some 
manner.  Why,  then,  should  an  uneconomic 
manner  be  chosen? 

It  is  certainly  uneconomic  to  tax  industry  to 
support  idleness,  or  to  tax  industry  to  put  up 


142     When  the  Workmen  Help  You  Manage 

what  will  probably  be  quite  unnecessary  public 
buildings  and  the  like,  with  the  stupendous 
waste  that  so  often  accompanies  a  public  under- 
taking. In  either  event,  the  seasonal  industry 
will  pay  for  the  unemployed  days  by  an  increase 
in  taxation,  and  that,  added  to  the  burden  of 
carrying  unproductive  buildings  and  machinery, 
will  all  go  to  increase  the  cost  of  the  finished 
product  and  to  restrict  its  market.  The  man 
with  a  business  must  take  care  of  unemploy- 
ment in  one  way  or  another;  so  why  not  care 
for  it  in  a  manner  that  will  benefit  both  the 
worker  and  himself? 

Aside  from  the  loss  occasioned  to  the  em- 
ployer by  the  general  dissatisfaction  of  work- 
men who  are  economically  insecure,  seasonal 
business  suffers  two  other  direct  and  often 
easily  measurable  losses. 

A  workman  needs  a  certain  amount  of  money 
in  order  to  live  the  year  round.  It  is  not  the 
daily  wage,  but  the  total  yearly  earning,  that  in- 
terests him  the  most.  Therefore,  if  he  must 
face  a  period  of  unemployment,  he  must  get  high 
enough  daily  wages  to  allow  him  to  lay  up  a 
surplus  for  idle  periods.  If  you  doubt  this, 
compare  the  wages  in  seasonal  lines  with  those 
paid  in  year-round  jobs.  Then,  too,  the  bulle- 
tins of  employment  agencies  are  full  of  such 


Providing  Steady  Jobs  for  Your  Men     143 

comments  as  '^ year-round  work,"  '' permanent 
employment, ' '  and  so  on,  showing  that  workmen 
are  attracted  by  the  hope  of  permanence. 

This  means  that  men  will  work  for  less  per 
day  on  a  year-round  job,  with  a  resulting  reduc- 
tion of  the  unit  labor  cost  of  the  product. 

The  second  measurable  loss  is  that  occasioned 
by  losing  trained  men.  The  seasonal  plant  sel- 
dom gets  back  the  men  it  laid  off  the  preceding 
season.  Nearly  any  job  demands  a  greater  or 
less  training,  and  few  workmen  can  be  trained 
to  do  even  the  simplest  operation  for  less  than 
twenty-five  dollars.  When,  therefore,  a  trained 
operator  leaves  permanently  and  his  successor 
must  be  trained,  there  is  a  definite  loss. 

In  several  plants  that  have  done  away  with 
seasonal  lay-offs,  it  has  been  found  that  a 
marked  improvement  has  occurred  in  the  atti- 
tude of  the  men  toward  the  job.  A  man  who 
knows  that  in  a  few  months  he  is  going  to  have 
to  face  jobless  days  is  bound  to  feel,  even  if  he 
does  not  say,  ''If  the  boss  does  n't  care  what 
happens  to  me,  why  should  I  care  what  happens 
to  him?" 

He  will,  in  consequence,  soldier  on  the  job,  be 
careless  with  work,  tools,  and  machines,  and  in 
general  be  antagonistic  to  the  employer;  and 
the  difference  between  antagonism  and  coopera- 


144     When  the  Workmen  Help  You  Manage 

tion  is  often  the  difference  between  loss  and 
profits  for  the  company.  Even  where  profits 
persist  in  spite  of  antagonism,  they  would  be 
larger  if  the  men  were  for  the  company.  A  man 
who  has  to  worry  over  his  job  or  his  finances  is 
not  in  the  right  frame  of  mind  to  do  much  good 
work.  The  wise  employer  makes  sure  that  his 
men  are  financially  free  from  worry. 

Although,  most  employers  will  admit  that  a 
seasonal  business  is  not  the  most  desirable  kind, 
few  will  admit  that  the  seasonal  element  can  be 
avoided.  How  about  the  window-screen  manu- 
facturer who  overcame  six  months'  shut-downs 
by  taking  on  a  line  of  game  boards  to  sell  to  the 
Christmas  trade?  He  thought  his  business  was 
incurably  seasonal,  but  it  was  not. 

Therefore  let  us  assume  that  a  seasonal  busi- 
ness is  a  diseased  patient  and  look  about  for  a 
cure.  There  are  no  absolutely  incurable  cases 
— at  least,  I  have  never  heard  of  or  seen  any. 
But  there  is  no  panacea,  no  patent  medicine, 
which,  after  shaking  the  bottle,  may  be  adminis- 
tered as  a  cure-all. 

The  first  step  toward  solving  the  problem  of 
providing  a  year-round  market  is  to  know  costs 
with  almost  absolute  exactness  through  every 
month  of  the  year ;  then  one  can  determine  just 


Providing  Steady  Jobs  for  Your  Men     145 

how  much  of  the  burden  assessed  during  work- 
ing periods  is  due  to  the  weeks  of  idleness. 

That  starts  one  on  the  way  to  estimate  what 
the  product  should  cost  if  manufactured  at  plant 
capacity  throughout  the  year — what  reduction 
in  price  might  be  brought  about  by  eliminating 
the  wastes  of  seasonal  production,  thus  perhaps 
by  virtue  of  a  lower  price  reaching  a  larger  and 
more  regular  market.  These  costs  are  funda- 
mental, and  unless  they  are  accurate  no  well 
reasoned  plans  can  be  laid — for  those  plans  can 
have  no  higher  accuracy  than  the  figures  on 
which  they  are  founded. 

Next  in  order  is  a  study  of  the  market — its 
buying  power  and  buying  habits.  Quite  often, 
seasonal  buying  is  due  as  much  to  the  seller  as 
to  the  buyer,  and  is  a  relic  of  the  days  when  the 
merchant  came  to  town  twice  a  year  to  ''stock 
up."  When  this  is  true,  it  is  up  to  the  seller  to 
educate  the  buyer  in  the  advantages  to  be  gained 
by  him.  It  is  not  out  of  the  question  to  change 
the  buying  habit  of  an  entire  nation.  Well  con- 
sidered advertising  has  done  it  in  many  ways 
already.  It  should  be  equally  effective  in  over- 
coming seasonal  tendencies. 

Or,  again,  it  may  be  that  the  seller  has  so  lim- 
ited his  territory  of  sale  as  to  be  himself  con- 


146     When  the  Workmen  Help  You  Manage 

trolled  by  the  seasons.  It  is  well  to  remember 
that  the  seasons  are  not  everywhere  the  same. 
South  of  the  equator  they  are  exactly  opposite 
to  ours.  Even  in  the  parts  of  the  northern 
hemisphere  where  the  seasons  correspond 
closely  to  those  in  the  United  States,  foreign 
markets  will  often  help  to  smooth  out  produc- 
tion peaks,  due  to  the  length  of  time  goods  must 
be  in  transit.  In  some  parts  of  Eussia,  for  in- 
stance, climates  are  nearly  identical  with  those 
in  this  country.  Goods  for  those  sections, 
which  are  purchased  by  the  consumer  season- 
ally, must  therefore  be  shipped  from  here  from 
two  to  four  months  ahead  of  the  season.  There- 
fore, in  a  business  having,  say,  two  production 
peaks  a  year,  the  low  points  of  production  could 
well  be  filled  by  manufacturing  for  the  Eussian 
trade. 

Needless  to  say,  Russia  has  been  taken  simply 
is  an  example.  There  are  dozens  of  other  coun- 
tries where  this  is  true.  A  little  geography  will 
not  harm  any  one  and  especially  the  sales  man- 
ager. 

In  this  study  should  be  an  estimate  of  what 
the  market  might  take  out  of  season  if  the  price 
were  sufficiently  attractive,  and  also  an  estimate 
of  how  far  ahead  it  might  be  possible  to  book 
orders.     Those  articles  in  which  the  cost  of  the 


Providing  Steady  Jobs  for  Your  Men     147 

raw  material  is  of  prime  importance,  such  as 
cotton  and  woolen  goods,  do  not  lend  themselves 
so  easily  to  this  sort  of  planning  as  do  those  ar- 
ticles in  which  labor  is  the  chief  factor. 

Following  the  examination  of  the  present 
market  comes  a  study  of  the  possibilities  of 
other  markets  in  the  United  States  and  abroad 
which  may  act  as  seasonal  outlets  to  stabilize 
production — not  take  care  of  surplus,  which  is 
about  the  only  use  of  foreign  markets  that  we 
have  made  to  date,  but  as  a  part  of  the  year's 
production  program. 

With  these  facts  in  hand,  one  is  ready,  intelli- 
gently, to  plan.  And  probably  this  intensive 
examination  of  the  business  will  turn  up  some 
surprising  facts  on  the  markets  that  were  sup- 
posed to  be  good  and  on  the  prices  that  have 
been  charged.  Too  often  prices  are  permitted 
to  be  made  by  rule-of -thumb  competitors,  and  it 
may  be  found  that  some  markets  have  been  sold 
at  a  loss.  In  the  interests  of  full-time  produc- 
tion, it  may  be  advisable  to  sell  in  some  markets 
at  a  loss,  because  that  loss  is  not  so  great  as  the 
loss  due  to  ''shutting  down";  but,  in  any  event, 
the  knowledge  should  be  in  hand  as  to  whether 
or  not  losses  are  being  taken. 

If  the  price  based  on  a  full  year's  production 
can  be  made  sufficiently  low,  then  it  is  up  to  the 


148     When  the  Workmen  Help  You  Manage 

sales  department  to  get  customers  to  stock 
ahead  and  take  advantage  of  the  price.  The 
canny  retailer  of  to-day  does  not  stock  much 
ahead,  for  he  knows  that  quick  turns  and  small 
profits  per  turn  form  the  best  business  basis. 

But  the  much  lower  price  may  attract  him ;  or, 
again,  a  solution  may  be  found  in  the  trade  ac- 
ceptance, which  can  be  used  to  bring  the  time  of 
payment  for  the  goods  up  to  the  usual  period, 
and,  at  the  same  time,  let  the  manufacturer  have 
the  use  of  the  money.  Acceptances  longer  than 
three  months  are  not  subject  to  rediscount  in 
the  Federal  Reserve  Banks,  but,  following  the 
European  practice,  long-term  acceptances  are 
now  being  taken  as  collateral  for  loans  and  dis- 
counted when  they  enter  the  three-months' 
period. 

Another  scheme  is  to  cooperate  with  dealers 
in  putting  on  sales  of  goods  out  of  season.  This 
is  a  particularly  desirable  method  in  that  it 
benefits  both  the  buyer  and  seller  by  promoting 
business  in  dull  times.  It  has  been  used  with 
great  effect  by  retailers  in  white  goods,  furni- 
ture, and  the  like;  and  there  is  no  reason  why 
the  same  practice  can  not  be  extended  to  many 
other  lines  in  and  outside  of  retailing.  Build- 
ing, it  would  seem,  offers  a  particularly  wide 
field  for  bargain  days. 


Providing  Steady  Jobs  for  Your  Men     149 

Several  manufacturers  have,  with  consider- 
able success,  increased  their  advertising  in  the 
periods  when  sales  are  dullest,  and  cut  it  down 
somewhat  during  the  natural  periods  for  buy- 
ing ;  and,  following  the  same  principle,  the  com- 
missions to  agents  have  been  made  highest  out 
of  season  and  lowest  in  season. 

As  the  quality  of  a  product  is  improved,  less 
and  less  difficulty  is  had  with  seasonal  purchas- 
ing. A  manufacturer  in  Cleveland,  whose  shop 
was  controlled  to  a  large  degree  by  the  workers, 
put  the  question  of  season  up  to  them,  and  they 
concluded  that  extra  quality  would  make  their 
product  sell  all  the  year  round.  With  that 
thought  in  mind,  they  have  established  so  high 
a  standard  that  the  product  sells  the  year  round, 
and  it  has  not  since  been  necessary  to  lay  off  a 
single  employee.  And  they  are  in  the  clothing 
business — which  is  usually  most  seasonal. 

Accurate  planning  by  which  the  demand  is 
distributed  over  the  production  year  nearly  al- 
ways works  wonders.  Take  this  instance  of  a 
manufacturer  of  household  specialties.  He 
made  about  fifteen  hundred  articles,  and,  al- 
though all  were  staples,  they  showed  a  surpris- 
ing seasonableness  in  distribution.  The  de- 
mand ran  approximately  thus:  first  quarter, 
twenty  thousand  pounds ;  second  quarter,  eight 


150     When  the  Workmen  Help  You  Manage 

thousand  pounds;  third  quarter,  ten  thousand 
pounds ;  fourth  quarter,  thirty  thousand  pounds. 

Following  the  demand,  therefore,  meant  al- 
ternate periods  of  intensive  production  and  vir- 
tual shut-down,  with  all  the  waste  and  labor  un- 
rest that  such  intermittent  production  entails. 
This  is  how  my  organization  stabilized  this  busi- 
ness: 

We  tabulated  the  shipments  for  five  years 
preceding,  month  by  month  and  item  by  item. 
Each  article  was  studied  alone,  and,  wherever 
the  demand  was  sufficiently  uniform,  we  estab- 
lished maximum  and  minimum  reserves — that 
is,  we  expressed  the  sales  in  terms  of  so  many 
days '  supply,  and  scheduled  production  to  keep 
thirty,  forty-five  or  sixty  days  ahead,  as  needed, 
thus  filling  up  part  of  the  factory's  capacity  for 
certain  months  of  the  year.  This  applied  only 
to  the  articles  of  fairly  uniform  demand.  The 
very  seasonal  goods  were  on  a  different  basis, 
and  here  we  deliberately  prearranged  a  distri- 
bution of  production,  so  that  the  articles  might 
be  made  up  as  they  dovetailed  into  the  produc- 
tion scheme,  and  yet,  when  the  peak  of  demand 
arrived,  the  stock  would  be  ready  to  ship.  Here 
is  the  schedule  on  a  single  article : 


Providing  Steady  Jobs  for  Your  Men     151 

Quarters 

1st  2d  3d  4th 

lbs.  lbs.  lbs.  lbs. 

Past  Sales                                       250  300  175  657 

Monthly  schedule  of  manufacture  375  375  375  300 

Balance  after  expected  shipments  125  75  200  25 

Accumulated  reserve                       125  200  400  25 

Every  item  was  analyzed  in  this  manner  and  a 
program  outlined,  with  the  following  results : 

Quarters 

1st          2d           3d  4th 

Sales                              20,000      8,000     10,000  30,000 

Production                    18,000     15,000     15,000  20,000 

Instead  of  a  widely  swinging  production 
range  from  eight  thousand  to  thirty  thousand 
pounds  to  meet  the  sales  levels,  the  production 
varied  only  from  fifteen  thousand  to  twenty 
thousand  pounds,  and  other  articles  were  so  put 
into  production  as  to  keep  a  practically  uni- 
form factory  output  during  the  entire  year. 

The  disadvantage  of  this  method  of  planning 
is  that  the  rate  of  turnover  is  somewhat  slowed 
down  by  the  large  stock  which  must  of  necessity 
accumulate;  but  that  objection  is  far  from  seri- 
ous when  lined  up  against  the  ** in-and-out" 
manufacturing  year  which  formerly  existed. 

Selling  abroad  is,  however,  the  antidote  to 


152     When  the  Workmen  Help  You  Manage 

seasonal  home  buying  which  holds  the  largest 
possibilities,  and  unless  the  American  manufac- 
turer takes  advantage  of  the  new  opportunities 
he  is  certain  to  have  difficulties  in  preserving  an 
even  flow  of  production  and  therefore  of  labor. 
As  I  have  said,  year-round  production  is  to  be 
considered,  not  as  a  labor  aid,  but  as  a  step 
preliminary  to  even  the  hope  for  efficient  coop- 
erative work. 

The  scientific  method  of  foreign  selling  is  to 
fit  it  into  the  home  schedule,  in  much  the  same 
way  as  I  have  just  described,  to  fill  the  gaps, 
and  then  to  go  after  the  foreign  sales  with  the 
production  schedule  in  mind.  It  will  not  help 
matters  to  have  the  foreign  demand  coincide 
with  the  home — that  will  only  be  increasing  the 
load  at  the  peak,  and  will  aggravate  the  existing 
inefficient  production. 

The  real  place  for  foreign  sales  is  in  the  dull 
seasons  at  home.  The  manufacturer  thus  sell- 
ing is  able  to  fix  his  costs  well  in  advance,  and 
to  go  through  the  year  intelligently,  instead  of 
having  spasms  of  convulsive  activity  alternate 
with  semi-comas  of  lethargy.  The  main  hope 
of  most  seasonal  businesses  lies  in  overseas  dis- 
tribution, and,  with  that  thought  in  mind,  prices 
can  be  made  that  will  be  nearly  certain  to  secure 
the  sales. 


Providing  Steady  Jobs  for  Your  Men     153 

In  a  few  businesses — perhaps  in  more  than  a 
few — other  lines  can  be  taken  on,  after  the  man- 
ner of  the  coal-dealer  who  handles  ice  in  the 
summer-time  and  thus  keeps  his  motor-trucks 
engaged.  The  manufacturer  who  declines  to 
take  on  new  lines  much  resembles  the  bricklayer 
who,  when  out  of  a  job,  refuses  to  take  up  any 
other  wage-earning  vocation  on  the  ground  that 
he  knows  but  one  trade. 

American  manufacturers  discovered,  among 
other  things,  during  the  war,  that  their  plants 
and  their  workmen  are  capable  of  making  many 
hitherto  unheard-of  articles.  The  tendency  of 
standardization  is  to  lead  both  the  manufac- 
turer and  the  worker  into  the  idea  that  they  can 
make  only  one  article,  and  that  in  only  one  way. 
War  work  was  a  tonic  for  this  purely  mental 
disease.  The  country  has  been  short  of  skilled 
workers,  and  especially  of  all-around  machine 
men  in  other  than  the  special  tool-making 
trades.  Now  we  have  a  fairly  large  body  of 
men  who,  if  not  skilled,  yet  are  not  wedded  to  a 
single  kind  of  work. 

These  men  form  the  nucleus  for  such  owners 
as  desire  to  manufacture  what  might  be  called 
a  buffer  product  to  keep  the  factory  going  when 
the  main  or  seasonal  occupations  have  gone.  It 
is  quite  impossible  to  make  rules  or  even  sug- 


154     When  the  Workmen  Help  You  Manage 

gestions  for  such  complementary  products,  for 
everything  depends  upon  the  nature  of  the  main 
product  and  the  existing  equipment.  Some- 
times a  line  similar  to  that  already  made  can 
be  taken  on;  sometimes  the  departure  will  be 
into  very  different  lines. 

For  instance,  the  packers,  partly  to  use  waste 
materials  and  partly  to  preserve  an  evenness  of 
flow,  are  not  only  in  all  kinds  of  canned  goods, 
but  also  in  sporting,  outfitting,  and  in  many 
other  apparently  unconnected  branches.  The 
Du  Fonts  have  branched  into  a  dozen  or  more 
lines,  and  in  fact  nearly  all  of  the  very  large 
manufacturers  have  taken  on  one  or  more  side 
products. 

Following  out  this  supplementary  and  com- 
plementary field  is  of  most  adventurous  inter- 
est, and  its  study  is  not  only  worth  while  from 
the  continuous-production  standpoint,  but  also 
for  the  utilization  of  the  buildings  and  machin- 
ery bought  for  war  work. 

Perhaps  I  have  spoken  as  if  the  only  seasonal 
business  is  the  one  that  must  shut  down  its  plant 
entirely  at  times.  That,  of  course,  is  not  so. 
The  business  that  has  fluctuation  enough  ever 
to  require  men  to  be  laid  off  because  of  lack  of 
work,  due  to  other  than  general  depressions,  is 
seasonal.     That   is,   it   is   either   seasonal   or 


Providing  Steady  Jobs  for  Yov/r  Men     166 

poorly  planned,  and  in  either  event  needs  a  doc- 
tor. 

The  long  and  short  of  it  is  that  this  dull  period 
lay-off  disease  results  in  economic  losses  both 
to  the  men  and  to  the  employer.  To  the  men 
it  is  most  serious,  for  their  margin  between 
earnings  and  living  is  narrower  than  for  the 
plant-owner.  To  the  men  a  lay-off  is  tragedy. 
To  the  employer  lost  profits  may  or  may  not 
be  serious. 


CHAPTER  VIII 

PBESERVING   THE   WAGE   SYSTEM 

Not  wages  alone,  but  the  whole  wage  system, 
is  to-day  on  trial  throughout  the  world.  The 
test  has  not  yet  come  in  America,  but  it  will 
come,  and  we  shall  have  either  to  reply  with  an 
adequate  wage  system  or  accept  the  principles 
of  Marxian  socialism  with  its  total  abolition  of 
capital  and  wages. 

What  is  the  wage  system?  Without  going 
into  the  maze  of  phrases  that  surround  most  of 
the  definitions,  it  is  this:  Capital  owns  the 
means  of  production,  while  labor  operates  the 
means  of  production.  Each  must  have  wages. 
In  modem  industry,  labor  can  not  own  the 
means  of  production,  but  must  work  for  capital 
— hence  the  term  "wage  slavery."  Capital  is 
an  inert  and  useless  thing  without  labor.  Labor 
can  not  exist  without  capital — it  must  either 
work  for  capital  or  take  over  the  means  of  pro- 
duction, thereby  destroying  capital. 

The  opposite  of  the  wage  system  is  commun- 

156 


Preserving  the  Wage  System        157 

ism,  in  which  capital  is  eliminated  and  labor 
owns  the  means  of  production. 

If  the  wage  system  is  to  survive  the  coming 
test,  it  must  be  sound  and  equitable. 

If  the  wages  of  both  capital  and  labor  are 
so  nicely  adjusted  that  each  is  better  off  in  union 
than  they  would  be  apart,  then  the  capitalist 
system — the  wage  system — is  justified.  Other- 
wise it  is  not. 

The  object,  then,  is  to  adjust  these  wages  to 
a  nicety,  so  that  the  benefits  will  be  mutual — so 
that  each  will  get  its  fair  share  and  each  will 
know  that  it  is  getting  its  fair  share.  There  is 
no  innate  compatibility  between  capital  and 
laibor;  they  are  bound  only  by  money  ties — 
which,  until  human  nature  changes,  will  be  the 
strongest  ties  knowm.  If  capital  can  not  have 
a  fair  share,  it  will  not  bother  to  employ  itself 
and  will  seep  away.  If  labor  can  not  make  any 
money  out  of  capital,  it  will  conclude,  with  the 
Bolshevists,  that  production  for  profit  is  a  fail- 
ure and  that  capital  had  best  be  abolished  and 
production  for  use  substituted. 

To  be  equitable  the  wage  system  must  guaran- 
tee to  the  wage-earner  several  things.  One  is 
year-round  employment,  which  I  discussed  in 
the  preceding  chapter. 

Germany  seems  to  have  been  the  first  country 


158     When  the  Workmen  Help  You  Manage 

to  get  at  this  root  of  the  trouble.  There  it  has 
so  long  been  a  maxim  that  capital  must  provide 
twelve  months  of  work  each  year  that  one  no 
longer  thinks  of  discussing  the  question — it  is  a 
settled  fact.  German  factories  do  not  have  sea- 
sons. In  the  Krupp  plant,  for  instance,  between 
1870  and  1918  the  force  was  never  reduced  and 
the  works  were  never  shut  down. 

And,  although  munition  products  formerly 
made  up  a  steady  all-the-year  business  for 
Krupp 's,  they  absorbed  only  five  per  cent,  of  the 
weight  of  the  total  output,  and  do  not  at  all  ac- 
count for  the  fact  that  the  rolling-mills,  the 
forge  shop,  and  the  many  other  departments 
dealing  with  peace  work,  kept  their  full  output, 
month  in  and  month  out.  Our  own  steel  works 
do  not  do  that. 

And  the  apparently  seasonal  occupations, 
such  as  the  woolens,  the  cottons,  and  the  silks, 
likewise,  in  Germany,  have  managed  to  preserve 
their  full  year  of  work,  either  by  stocking  in  dull 
times  or  by  sending  their  products  into  distant 
foreign  markets  where  the  seasons  are  reversed. 
German  production  costs  were  extremely  low, 
because  the  idle  plant  charges  did  not  have  to 
be  borne  by  the  working  hours,  and  neither  did 
men  have  to  be  paid,  while  working,  for  some 
time  when  they  would  not  be  working. 


Preserving  the  Wage  System,        159 

The  other  result  is  that,  due  to  this  principle 
of  mutual  obligation  of  capital  and  labor,  the 
workman  of  Germany  to-day  is  not  dissatisfied 
with  the  wage  system,  and  does  not,  with  a  few 
exceptions,  desire  to  abolish  capital. 

Moreover,  the  German  workers  have  accepted 
the  economic  principles  that  money  is  only  a 
medium  of  exchange,  and  they  are  perfectly 
willing  to  calculate  their  wages  in  food-buying 
power,  to  have  them  reduced  or  raised  accord- 
ing to  the  purchasing  power  of  the  money.  Be- 
cause of  this  principle,  unemployment  has  al- 
ways been  at  a  very  low  figure  in  Germany. 
Recently  Essen  was  much  perturbed  because  it 
had  fifteen  thousand  unemployed  on  the  streets, 
whereas  in  normal  times  it  has  no  unemploy- 
ment. Can  one  imagine  Pittsburgh  being  wor- 
ried because  a  mere  fifteen  thousand  people  did 
not  have  jobs?  I  think  that  the  Essen  figure  is 
below  the  normal  unemployment  of  any  of  our 
larger  industrial  centers. 

The  German  employer  does  not  change  the 
size  of  his  force  to  suit  the  seasons ;  and,  since 
he  does  not  discharge  men,  they  rarely  leave  of 
their  own  accord.  Consequently  German  fac- 
tories, in  normal  times,  have  almost  no  labor 
turnover  at  all,  except  that  arising  from  illness 
and  death.     The  majority  of  German  concerns 


160    When  the  Workmen  Help  You  Manage 

consider  ten  years  a  low  average  for  a  worker's 
length  of  service.  If  Germany  had  a  high  rate 
of  labor  turnover,  the  result  would  not  be  so 
serious  as  in  America  because  of  the  great  num- 
ber of  skilled  workers  that  is  always  at  com- 
mand. But,  considering  the  enormous  waste  of 
money  in  the  American  turnover,  is  it  any  won- 
der that  Germany,  without  as  highly  developed 
methods  or  machinery,  can  undersell  us^ 

The  reaction  to  seasonal  work  in  the  seething 
labor  situation  of  England  has  been  the  demand 
on  the  part  of  the  unions  that  work  shall  con- 
tinue through  the  year,  and  it  is  to-day  accepted 
as  a  fact  by  English  employers  that  wages  are  a 
yearly  and  not  a  weekly  or  fortnightly  affair. 

The  English  trades  unions  are  organized  on 
the  basis  of  capital  and  labor,  and  the  employ- 
ers see  in  them  the  greatest  bulwark  against  the 
rising  tide  of  communism.  The  so-called  Joint 
Industrial  Councils  are  the  announcement  of 
England's  desire  to  join  organized  labor  and 
organized  capital  against  the  destructive  ele- 
ments. 

These  councils  are  interesting.  The  provi- 
sions are  for  a  national  council,  made  up  of  rep- 
resentatives of  the  unions  and  representatives 
of  the  employers '  association.  This  council  will 
decide  all  matters  that  are  capable  of  national 


Preserving  the  Wage  System        161 

adjustment.  Next  below  them  will  be  district 
councils,  made  up  of  the  representatives  of  the 
district  union  organization  and  the  district  em- 
ployers' organization.  And,  finally,  in  each 
shop  will  be  a  workshop  committee,  composed  of 
representatives  of  the  emploj'^ees  and  of  the  em- 
ployer. Thus  each  industry  will  have  respon- 
sible bodies  for  the  adjustment  of  disputes  and 
for  the  application  of  rules.  The  effect  will  be 
to  create  vast  guilds,  and  it  is  not  unlikely  that 
the  necessity  for  uniform  rules  and  procedures 
will  be  such  as  to  take  away  the  individuality 
from  enterprise. 

The  war  proved  to  most  of  us  that  industry 
can  not  well  be  controlled  from  the  top,  but  that 
to  function  to  best  advantage  a  large  degree  of 
freedom  must  remain  with  the  individual.  The 
joint  industrial  councils  provide  all  the  evils 
that  attend  the  socialization  of  industry.  They 
suffer  from  that  lack  of  elasticity,  that  wooden- 
ness  of  effort,  and  that  drab  uniformity  which 
characterize,  say  state-owned  railways  or  pos- 
tal service. 

And  yet,  the  joint  industrial  councils  are 
the  logical  result  of  the  theory  that  capital  and 
labor  are  natural  competitors,  and  that  it  is  the 
business  of  each  to  get  all  that  can  be  had  from 
the  other.    That  is  the  opinion  held  in  England, 


162    When  the  Workmen  Help  You  Manage 

where  collective  wage  bargaining  has  reached 
its  zenith  and  it  remained  only  for  either  capi- 
tal or  labor  to  vanish.  Capital  forced  down 
wages  or  locked  out  men  whenever  it  saw  an 
advantage  to  be  gained,  and  labor  forced  up 
wages  or  struck  whenever  it  found  the  capital 
particularly  needed  its  services.  The  indus- 
trial councils  are  not  so  much  a  truce  in  this 
war  as  the  provision  for  continuous  machinery 
so  that  the  bargaining  may  go  on  without  the 
waste  of  strikes  or  lockouts.  They  represent  a 
mutual  concession  to  preserve  the  wage  system. 

Against  the  wage  system  are  arrayed,  and 
especially  in  England,  a  great  number  of  radi- 
cals who  are  striving  for  the  overthrow  of  capi- 
tal. All  of  the  recent  strikes  in  England — the 
big  Clyde  and  Belfast  strikes,  the  London  dock- 
ers'  strike,  the  various  strikes  in  the  engineer- 
ing trades  and  the  coal-mines — were  primarily 
directed  against  capital,  and  all  were  without 
the  sanction — and  in  fact  in  direct  violation — of 
the  orders  of  the  chief  union  officials. 

These  strikes  are  ostensibly  for  higher  wages 
and  shorter  hours,  simply  because  these  are 
arguments  that  catch  the  unthinking.  For  in- 
stance, they  asked  for  forty  hours  a  week;  yet 
the  leaders  publicly  said  that  if  they  got  the 
forty-hour  week  the  next  strike  would  be  for 


Preserving  the  Wage  System        163 

thirty-six  hours,  and  so  on  down  the  line  until 
the  employer  threw  up  his  hands  and  said  that 
he  could  not  go  on. 

Thus,  growing  out  of  the  wage  system  in  Eng- 
land we  find  two  parties:  the  first  would  pre- 
serve the  system  by  elaborate  but  stifling  con- 
stitutionality; while  the  other  would  destroy  it 
by  direct  action.  Neither  course  would  be  wel- 
come in  the  United  States,  and  it  is  therefore 
the  part  of  the  employer  here  to  make  the  wage 
system  so  equitable  that  it  will  neither  have  to 
be  incased  in  a  cage  or  be  the  subject  of  attack. 

Let  us  see  the  courses  suggested  by  the  oppo- 
nents of  the  wage  system — I  am  quoting  from 
an  English  Labor  man : 

''More  important  even  than  changes  of  struc- 
ture are  changes  of  policy.  The  trades  unions 
must  abandon  the  old  definition  of  their  func- 
tion which  explained  their  existence  as  neces- 
sary, 'for  the  purpose  of  maintaining  or  im- 
proving the  conditions  of  the  wage-earner's  em- 
ployment,' and  remodel  their  policy  with  the 
aim  of  becoming  'associations  of  workers  for 
the  purpose  of  overthrowing  the  wage  system 
and  assuming  the  control  of  industry  in  con- 
junction with  the  State,' 

"Such  a  share  in  control  must  develop  out  of 
the  existing  situation,  and  can  not  be  postponed 


164     When  the  Workmen  Help  You  Manage 

until  the  structure  of  industrial  unionism  is  per- 
fected on  the  one  hand,  and  all  the  great  indus- 
tries are  nationalized  on  the  other.  The  unions, 
then,  must  be  prepared  to  wring  a  share  in  con- 
trol from  the  Capitalist,  so  long  as  the  State 
continues  to  tolerate  his  command  over  our  in- 
dustrial resources;  but  such  control  must  bo 
sharply  separated  from  the  bare  suspicion  of 
partnership. 

''The  unions  must  be  adamant  to  every  pro- 
posal, under  whatever  name  it  may  be  put  for- 
ward, which  could  lead  them  to  compound  the 
felony  of  capitalism.  The  value  of  every  step 
towards  control  must  be  judged  by  whether  it 
leaves  the  capitalist  weaker  and  the  trade  union 
stronger  as  an  external,  autonomous,  encroach- 
ing force.  If  it  does  not  seem  likely  to  lead  to 
this  result,  it  must  be  refused. 

"It  is  clear  that  'joint  control'  may  mean 
control  betw^een  the  unions  and  the  employers, 
nationally  or  locally,  by  means  of  joint  commit- 
tees, or  it  may  mean  'workshop  control'  between 
the  employers  and  the  employees  and  the  work- 
ers in  any  particular  shop.  In  the  latter  case 
it  is  vital  to  insist  that  it  shall  be  participated 
in  by  unionists  only ;  but  the  trades  unions  con- 
cerned must  see  to  it  that  it  is  they  who  enforce 
the  conditions,  and  not  the  employers. 


Preserving  the  Wage  System        165 

**In  general  the  true  policy  of  Labor  is  one 
that  insists  upon  the  employer  dealing  with  his 
workpeople  only  through  the  union  and  not  as 
individuals ;  and  in  this  connection  it  would  be 
well  to  strive  to  ensure  that,  while  the  worker 
continues  to  sell  his  labor,  he  shall  sell  it  not 
individually  but  collectively,  and  that  payment 
of  the  worker  shall  be  made  through  the  union. ' ' 

That  is  an  excellent  statement  of  those  who, 
within  the  union  movement,  would  pervert  it  to 
its  own  destruction.  Those  communists  outside 
the  unions  would  by  direct  action  destroy  both 
capital  and  the  unions,  and  substitute  the  con- 
trol of  the  proletariat. 

I  have  given  so  much  space  to  the  fundamen- 
tals of  the  wage  system  in  order  to  impress 
upon  the  American  employer  what  his  problem 
really  is:  the  offering  of  real  evidence — the 
evidence  of  the  thing  as  opposed  to  the  evidence 
of  the  word — that  the  wage  system  is  the  best 
for  the  community  at  large.  This  is  the  prob- 
lem squarely  and  frankly  to  be  faced.  And  I 
emphasize  this  point  because  there  is  not  lacking 
a  desire  to  dodge  it  and  to  substitute  phrases 
which  no  one  quite  understands  but  which  sound 
rather  well. 

Under  this  head  come  most  of  the  profit-shar- 
ing systems  that  are  springing  up  like  weeds  all 


166     When  the  Workmen  Help  You  Manage 

over  the  country — the  organization  of  foremen 
in  committees  to  give  them  more  power,  when  as 
a  matter  of  fact  they  should  usually  have  less 
power;  and  the  formation  of  shop  committees 
that  have  only  the  power  of  messengers. 

These  shells  of  remedies,  these  shadows  of 
improvements,  only  imperil  the  whole  wage  sys- 
tem by  providing  arguments  against  its  flexi- 
bility. For  it  must  be  borne  in  mind  that  some 
of  the  best  brains  in  the  world  are  now  writing 
and  talking  against  what  they  call  ''wage  slav- 
ery.'* I  am  not  concerned  with  the  sincerity  or 
the  lack  of  sincerity  in  those  measures  which  fail 
to  answer  the  question  in  issue.  I  am  not  much 
concerned  with  the  fact  that  an  employer  desires 
to  benefit  his  workers;  for  that  is  a  somewhat 
unnatural  attitude  which  usually  comes  from  an 
excess  of  paternalism  born  of  having  too  much 
money. 

The  only  attitude  is  for  the  employer  to  line 
up  on  one  side  and  the  employees  on  the  other. 
The  first  will  demand  all  possible  work  and  the 
second  all  possible  money,  and  then  they  will 
seek  for  a  definition  of  the  word  ''possible"  and 
perforce  be  satisfied  for  the  time  being.  What 
I  object  to  in  the  half-measures  is  that  they  lack 
common  sense — they  hope  to  obscure  the  real 
issue.     The  true  measure  will  meet  the  issue 


Preserving  the  Wage  System        167 

and  give  a  true  answer,  and  that  answer  will 
give  a  working  basis. 

Profit-sharing  does  not  adjust  the  relation — 
it  only  obscures  it  by  trying  to  presuppose  a 
relation  that  does  not  exist.  The  fallacies  of 
profit-sharing  I  will  take  up  in  the  next  chapter ; 
but  now  I  want  only  to  observe  that  the  wages 
of  capital  and  the  wages  of  work  have  nothing 
in  common  and  they  can  not  be  shared — they 
must  be  adjusted. 

The  fundamental  proposition  that  the  wages 
either  of  capital  or  of  labor  must  be  derived 
from  work,  and  only  from  work,  has  had  a  se- 
vere shock  during  the  war.  The  governments 
of  the  world,  but  more  particularly  of  England 
and  America,  have,  by  the  heedless  outpouring 
of  funds  derived  from  borro^dng,  effectively 
obscured,  in  the  popular  mind,  the  true  deriva- 
tion of  money. 

The  Bolshevists  say  that  money  is  unneces- 
sary in  an  ideal  society;  and  thej^  issue  it  as  fast 
as  the  printing-presses  will  work,  not  under  the 
delusion  that  they  are  financing,  but  with  the 
deliberate  intent  of  proving  by  the  process  of 
inflation  that  money  is  of  no  use,  after  all. 
They  have  so  far  succeeded  that  goods,  and  not 
money,  is  the  purchasing  power  in  Eussia  to- 
day. 


168    When  the  Workmen  Help  You  Manage 

Our  own  Government  started  with  a  different 
promise,  but  it  has  succeeded  in  convincing  the 
more  ignorant  employers  and  employees  that 
there  is  somewhere  an  inexhaustible  fund  which 
will  provide  wages  and  profits.  The  soldier  has 
found  himself  well  kept,  and  has  seen  millions 
expended  as  freely  as  formerly  dollars  were 
spent.  The  worker  has  found  that  his  labor,  or 
indeed  his  mere  presence  in  the  immediate 
neighborhood  of  work,  is  worth  whatever  he 
chooses  to  ask;  while  the  manufacturer  has  gen- 
erally discovered,  and  the  exceptions  are  rare, 
that  it  is  difficult  to  uncover  a  method  by  which 
he  can  lose  money  on  war-time  government 
contracts. 

The  socialists  say  that  the  State  can  do  all 
things  well,  and  the  governments  have  tried  to 
prove  that,  if  they  could  not  do  all  things  well, 
they  could  at  least  pay  for  all  things  well. 

There  is  no  reason  to  believe  that,  with  such 
a  vast  amount  of  paper  money  in  the  world, 
prices  will  lower  materially  for  many  years  to 
come ;  each  war  in  the  past  has  moved  the  world 
to  a  new  price  level.  We  should  be  foolish  to 
try  to  get  back  to  pre-war  wages  or  prices.  The 
effort  would  only  promote  revolution.  What 
we  have  to  get  back  to  is  some  relation  between 
capital   and   labor — not   the   old   relation,   but 


Preserving  the  Wage  System        169 

some  new  relation.  Otherwise  the  two  will 
cease  to  exist  as  entities. 

The  opposition  to  capital  is  usually  on  the 
ground  that  it  gets  more  than  its  fair  share. 
Does  it?  In  banking,  money  does  commonly 
fetch  more  than  it  should  be  worth  and  the 
profits  of  banks  are  higher  than  they  should  be. 
Even  the  Federal  Reserve  banks,  which  are  sup- 
posed to  be  run  at  a  minimum  of  profit,  can  not 
help  earning  fairly  large  dividends.  Therefore, 
to  the  extent  that  capital  demands  two  profits — 
one  for  its  mere  presence  and  the  other  for  its 
employment  in  manufacture — ^it  is  greedy;  and 
the  anti-capitalist  agitator  is  to  some  extent 
right. 

But  the  profits  of  capital  in  manufacture  are 
not  large  in  ordinary  times,  and  their  elimina- 
tion would  not  help  the  worker.  If  a  company 
with  a  capitalization  of  ten  million  dollars 
makes  ten  per  cent,  upon  its  capital,  the  result- 
ing million  seems  very  large  to  the  worker ;  but 
if  that  million  dollars  were  added  to  the  pay- 
roll of  most  concerns  large  enough  to  earn 
a  million  a  year  in  legitimate  business,  the  re- 
sulting increase  in  pay  would  not  be  very  large. 
If  the  worker  is  underpaid  he  will  bitterly  re- 
sent this  profit,  and  rightly.  Why  not,  then, 
let  the  worker  know  how  and  why  the  profit 


170     When  the  Workmen  Help  You  Manage 

arises,  and  exactly  what  share  he  has  in  the 
making  of  it?  If  it  then  appears  that  he  is 
underpaid,  he  should  have  more  money. 

I  urge  letting  the  worker  know  where  he 
stands  in  the  industrial  machine.  The  same 
process  will  inform  the  employer  where  he 
stands — for  often  the  employer  does  not  know 
a  great  deal  more  about  the  process  than  do 
his  employees,  else  we  should  not  find  small 
wage  raises  translated  into  very  large  raises  in 
the  price  of  the  finished  article. 

It  will  help  in  the  process  of  mutual  education 
to  dramatize  the  business  by  means  of  charts 
based  upon  exact  figures.  I  do  not  usually  ad- 
vocate charts,  because  they  can  not  go  into  suf- 
ficient detail  to  be  of  much  practical  help ;  but 
they  do  show  tendencies  and  relations,  and  tell 
a  story  that  the  actual  figures  can  tell  only  to 
the  expert.  These  charts  should  show  the  cost 
of  materials,  the  cost  of  labor,  the  cost  of  admin- 
istration, the  cost  of  selling,  and  the  final  profit, 
with  a  separation  in  each  of  the  direct  cost  and 
the  indirect. 

It  will  then  speedily  be  shown  where  econo- 
mies may  be  effected.  The  waste  may  be  in 
wages  that  do  not  represent  work,  or  it  may  be 
in  too  great  a  shop  burden  or  in  too  much  for 
administration  or  selling — or  it  may  be  in  all  of 


Preserving  the  Wage  System        171 

these  sectors.  But,  in  any  event,  the  working 
is  visualized,  and  a  shop  committee  elected  by 
the  workers  can  discuss,  with  intelligence,  the 
exact  relations  of  the  business. 

I  say  a  shop  committee  elected  by  the  work- 
ers. To  appoint  a  shop  committee  from  the 
workers,  or  to  appoint  a  committee  of  foremen 
or  superintendents,  does  not  get  at  the  trouble 
at  all.  The  idea  is  to  let  the  men  know  what 
they  are  doing  in  the  business,  and  this  is  not 
accomplished  by  a  conference  of  their  natural 
enemies — the  foremen.  A  committee  made  up 
of  foremen  is  merely  another  barrier  erected 
between  the  top  management  and  the  men,  and 
will  be  a  source  of  unceasing  trouble.  The 
''self-government"  that  finds  its  sole  expres- 
sion in  an  assembly  of  foremen  might  be  likened 
to  a  community  governed  in  its  every  phase  by 
policemen.  If  a  man  were  arrested  in  such  a 
community,  he  would  have  to  go  to  jail  merely 
to  preserve  ''the  honor  of  the  force." 

Since  we  know  that  a  wage  is  not  a  fixed  sum 
of  money,  but  a  relation,  tbe  full  knowledge  of 
the  day-to-day  working  of  that  relation  by  the 
employees  themselves  is  the  only  method  by 
which  they  can  be  convinced  of  its  fairness. 
The  worker  generally  realizes  that  five  dollars 
a  day  is  no  better  now  than  half  that  sum  was 


172    When  the  Workmen  Help  You  Manage 

before  the  war;  but  he  does  not  realize  that,  by 
the  same  token,  a  company  profit  of  two  hundred 
thousand  dollars  a  year  is  no  better  than  a  for- 
mer profit  of  one  hundred  thousand  dollars. 

During  the  war  several  large  banks  were  very 
successful  with  a  plan  by  which  a  committee  of 
employees  each  month  set  the  figure  of  their 
wages  according  to  the  price  index,  and  it  would 
make  for  better  understanding  if  the  same  idea 
were  introduced  into  factories.  If  the  people 
themselves  fluctuated  the  wages,  and  knew  why 
they  were  doing  it,  one  great  source  of  friction 
would  be  removed.  And  there  will  be  no  end  of 
opportunities  for  friction  during  the  coming 
long  period  in  which  the  purchasing  power  of 
money  will  be  unsettled. 

And,  while  it  is  the  greatest  possible  spur  to 
the  men  to  know  that  their  fate  rests  largely 
with  themselves,  it  is  not  at  all  bad  for  the 
management  also  to  be  put  on  its  mettle,  and  to 
be  compelled  to  show  results  to  the  men  as  well 
as  to  the  stockholders. 

No  one  who  has  had  experience  with  represen- 
tation as  opposed  to  absolutism  will  ever  return 
to  absolutism.  One  of  the  best  testimonials  is 
that  of  Sir  Albert  Stanley,  the  President  of  the 
British  Board  of  Trade,  who  had  an  experience 
of  many  years  in  railroad  construction  in  Amer- 


Preserving  the  Wage  System        173 

ica.  Both  of  the  instances  he  cites  are  out  of 
his  work  in  the  United  States : 

'*I  was  identified  with  two  separate  under- 
takings, one  rapidly  succeeding  the  other. 
Each  of  these  undertakings  had  in  its  employ 
practically  the  same  number  of  men — roughly 
speaking,  about  thirty  thousand.  One  of  the 
undertakings  was,  I  suppose,  really  the  last 
word  in  trade  unionism.  Every  single  em- 
ployee was  bound  to  accept  membership  in  the 
union.  The  other  undertaking  was  entirely  free 
from  that  sort  of  influence.  So  far  as  I  knew, 
not  a  single  man  identified  with  it  had  any  con- 
nection with  any  trade-union  movement. 

"What  was  my  experience  of  that? 

"In  the  trade-union  undertaking  provision 
was  made  whereby  any  grievance  could  be 
brought  forward  and  carried  right  to  the  very 
top,  for  the  purpose  of  adjustment.  It  fre- 
quently came  to  my  notice,  as  manager  of  that 
undertaking,  that  grievances  on  the  part  of  the 
men  had  a  real,  genuine  foundation.  It  fre- 
quently came  to  my  notice  that  some  sub-official 
was  not  justified  by  the  facts  in  some  action  he 
had  taken.  As  a  result  of  the  method  which 
existed,  many  grievances  were  remedied. 

"No  such  machinery,  at  least  adequate  and 
satisfactory  machinery,  existed  in  the  other  un- 


174     When  the  Workmen  Help  You  Manage 

dertaking.  If  there  was  any  grievance,  it  lay 
smouldering  beneath  the  surface  and  having  no 
opportunity  for  adjustment.  The  result  con- 
vinced me  that,  whether  it  is  done  by  established 
trade  unions  or  by  securing  the  cooperation  of 
selected  leaders  of  men,  whatever  the  system 
may  be,  it  is  absolutely  essential  for  the  success- 
ful conduct  of  a  business  in  which  a  large  num- 
ber of  men  are  employed  that  there  should  be 
set  up  machinery  that  will  secure  to  the  men  an 
opportunity  for  bringing  their  grievances  for- 
ward and  securing  them  against  punishment  on 
the  part  of  the  officials." 

Sir  Albert  speaks  only  of  the  negative  side  of 
representation.  The  positive  is  even  stronger; 
for  then  the  creative  instinct,  which  I  have 
discussed  in  previous  chapters,  comes  into  play 
— the  men  will  not  merely  sit  as  a  fault-finding 
body,  but  as  a  real  constructive  force.  And  as 
long  as  they  know  that  they  are  getting  a  square 
deal  they  will  not  care  how  much  the  employer 
makes.  The  average  employee  is  a  fair-minded 
individual,  who  becomes  unfair  only  when  he 
thinks  that  he  is  being  treated  unfairly. 

But  why  talk  so  much  about  money?  Is  the 
paying  of  money,  and  then  more  money,  the 
solution  for  labor  unrest?  Not  at  all.  The 
war  has  proved  that  money  is  not  even  the  big- 


Preserving  the  Wage  System        175 

gest  factor;  for  the  higher  the  wages,  the 
greater  has  been  the  unrest.  But  no  wage  sys- 
tem can  hope  to  survive  unless  there  is  a  wage 
to  support  it,  and  unless  in  addition  the  recipi- 
ents of  that  wage  are  satisfied  that  it  is  a  just 
wage,  and  that  it  will  increase  as  they  have 
more  labor  to  give  in  exchange.  Therefore,  if 
we  remove  the  mystery  with  which  so  many  like 
to  surround  the  process  of  profit-making,  we 
can  demonstrate  in  the  open  that  the  wage  sys- 
tem used  is  the  best — the  men  can  demonstrate 
the  fact  for  themselves. 

If  an  employer  imagines  that  he  can  not  let 
his  employees  know  where  and  how  money  is 
made,  then  he  is  not  prepared  to  combat,  with 
facts,  the  arguments  of  those  who  oppose  the 
wage  system.  Indeed,  his  mystery  lends  color 
to  their  frequently  lurid  statements  and  stimu- 
lates the  desire  to  destroy  capital. 

The  Russian  employer  thought  that  the  se- 
crets of  profit-making  were  too  full  of  import  to 
be  exposed  to  the  gaze  of  mere  workers.  The 
workers,  thinking  otherwise,  searched  for  those 
secrets  with  axes.  They  have  not  found  them. 
But  the  employer  is  guarding  his  secret  either 
in  the  grave  or  in  a  foreign  land.  Some  one 
else  is  guarding  his  plant. 


CHAPTER  IX 

WHY   PKOFIT-SHABING   FAILS 

' '  Pkofit-shaking  "  is  among  the  most  alluring 
phrases  in  the  language.  Because  it  is  so  pleas- 
ant, it  is  used  to  describe  the  promised  distribu- 
tion of  variously  derived  monies  presumably 
in  the  belief  that  the  worker  recipient  is  the 
happier  for  the  thought  that  he  is  getting  money 
coming  and  going — that  is,  first  as  a  worker  in 
the  form  of  wages,  and  second  as  a  proprietor 
in  the  form  of  dividends. 

I  have  already  touched  upon  profit-sharing. 
Now  let  us  see  in  greater  detail  whether  it  is  a 
panacea  or  an  irritant. 

It  is  of  historical  interest  to  know  that  the 
first  record  of  profit-sharing  is  found  in  the 
"Metayer  system,"  which,  starting  some  time 
in  the  thirteenth  century,  ran  for  nearly  three 
centuries  in  England.  Under  this  plan  the 
landlord  (it  was  an  agricultural  system)  pro- 
vided the  land  and  one  half  of  the  stock;  the 

tenant  returned  one  half  of  the  product.    It  is 

176 


Why  Profit-Sharing  Fails  177 

of  present  interest  to  know  that  in  the  course  of 
time  the  tenant  thought  that  he  was  giving  up 
more  than  the  landlord  was  entitled  to.  He  be- 
gan to  neglect  the  land,  and  finally  the  system 
went  out  of  practice. 

It  is  well  to  note  that  this  very  first  record  of 
what  is  called  profit-sharing  was  a  sharing  not 
at  all  of  profits,  but  of  production,  with  the  ten- 
ant taking  the  risks  and  the  landlord  the  pro- 
duction. Then  each  cast  up  his  accounts  to  dis- 
cover how  much  of  what  he  got  was  really  profit 
— although  the  accounting  methods  of  the  time 
were  delightfully  simple :  that  which  was  paid  in 
was  a  blessing,  and  that  which  was  paid  out  was 
a  misfortune. 

The  next  historic  case  is  that  of  Leclaire — a 
Paris  painter  and  decorator.  In  1842  he  can- 
nily  calculated  that  if  he  could  get  his  people  to 
save  on  time  and  material  he  could  add  some 
seventy-six  thousand  francs  to  his  profits.  He 
proposed  to  his  men  that  if  they  made  those  sav- 
ings he  would  give  them  a  share  of  what  would 
otherwise  be  his  individual  profit.  They  did 
not  like  the  idea  and  refused  to  try  it  out ;  but  a 
couple  of  years  later  Leclaire  managed  to  put 
the  scheme  into  operation,  and  in  the  first  year 
divided  a  divide-nd  of  twelve  thousand  francs. 

In  this  case  the  workers  were  distributed  on 


178    When  the  Workmen  Help  You  Manage 

many  small  jobs  all  over  Paris,  and  the  plan 
enabled  the  owner  so  to  curtail  supervision  that 
the  profits,  and  hence  the  dividends,  were  always 
fairly  large.  The  staff  never  exceeded  three 
hundred,  and  never  therefore  passed  beyond  the 
bounds  of  personality.  Although  the  dividend 
was  expressed  as  profits,  it  was  really  an  econ- 
omy bonus,  and  it  had  so  great  a  vogue  that  the 
present  owners  of  the  old  Leclaire  establishment 
still  keep  it  in  operation. 

The  Leclaire  method  differed  from  the  usual 
profit-sharing  plan  in  that  the  workers  took 
their  money  in  cash.  The  owner  had  no  plant 
upkeep  to  consider;  he  had  no  tools  of  great 
value — the  workers  owned  their  own  tools.  His 
function  was  merely  first  to  get  jobs,  and  then 
to  finance  them.  The  establishment  of  a  re- 
serve was  a  purely  personal  matter,  and  the 
items  of  depreciation  and  burden  were  trivial — 
in  fact,  as  far  as  I  can  learn,  they  did  not  at  all 
enter  into  the  bookkeeping.  The  excess  of  in- 
come over  outgo  was  profit. 

But,  as  the  idea  of  giving  the  worker  a  share 
in  industry  on  the  capitalistic  plane  spread,  it 
became  more  common  to  distribute  some  form 
of  stock  or  co-partnership  certificates  to  them, 
and  then  they  received  dividends  on  these  at  a 
fixed  rate  or  in  some  proportion  to  the  amounts 


Why  Profit-Sharing  Fails  179 

paid  on  the  stock  of  those  who  had  invested 
money. 

It  early  became  apparent  that  any  plan  that 
promised  a  fixed  percentage  of  the  profits  pay- 
able in  cash  was  dangerous,  because  it  did  not 
allow  for  the  building  up  of  a  reserve  or  for  the 
exigencies  of  business.  Out  of  two  hundred 
and  ninety-seven  firms  that  adopted  some  form 
of  profit  distribution  or  stock  participation  in 
England,  up  to  the  opening  of  the  war  in  1914, 
only  one  hundred  and  thirty-two  of  the  systems 
are  still  in  existence ;  and  of  these  forty-four  are 
gas  companies,  which  operate  under  a  somewhat 
peculiar  plan  which  I  shall  presently  describe. 
All  other  firms  either  gave  up  their  plans  or 
went  out  of  business  from  one  cause  or  anotlier. 
Take  a  few  random  notes  from  a  roster  of  the 
profit-sharing  in  England — they  are  illuminat- 
ing: 

In  1832  Lord  Wallscourt  introduced  profit- 
sharing  among  his  workmen,  and  continued  the 
plan  until  his  death  in  1849.  His  lordship's 
idea  was  to  reckon  every  worker  as  the  investor 
of  as  much  capital  as  will  yield  at  five  per  cent, 
the  sum  paid  to  him  in  wages. 

In  1865  Henry  Briggs,  Son  &  Company,  col- 
liery owners  in  Yorkshire,  adopted  a  profit- 
sharing  scheme  under  which  employees  received 


180     When  the  Workmen  Help  You  Manage 

a  moiety  of  excess  profits  (after  ten  per  cent, 
dividend  had  been  provided  for).  Extra 
bonuses  were  paid  to  men  who  invested  in  the 
company ^s  stock.  A  workmen's  committee  was 
formed  to  advise  as  to  methods  of  working.  A 
workman  director  was  elected  in  1869.  The 
system  was  abolished  in  February,  1875,  in  con- 
sequence of  a  wages  dispute. 

In  1866  John  Curwen,  a  music  printer  of 
Plaistow,  adopted  a  plan  by  which  a  moiety  of 
profits  over  ten  per  cent,  was  shared  with  em- 
ployees and  paid  in  cash  as  a  bonus  on  wages. 
The  scheme  was  abolished  in  1872  because 
profits  had  fallen  and  the  men  demanded  an  in- 
crease in  wages  to  compensate  them  for  the  loss 
of  their  bonus. 

In  1866  the  South  Buckley  Coal  &  Fire  Brick 
Company  directed  that  shares  to  the  value  of 
ten  thousand  pounds  (nominal)  be  reserved  for 
their  workmen.  The  company  went  into  liqui- 
dation before  it  had  earned  any  profits. 

In  1866  the  Cobden  Memorial  Mills  Company, 
Ltd.,  of  Sabden,  Lancaster,  reserved  one  fourth 
of  share  capital  for  the  workmen,  who  were 
promised  ' '  one  half  of  the  surplus  profits  above 
ten  per  cent."  This  undertaking  was  unsuc- 
cessful and  was  wound  up  in  1887. 

In  1866  Fox,  Head  &  Company,  iron-workers 


Why  Profit-Sharing  Fails  181 

of  Middlesbrough,  introduced  a  kind  of  profit- 
sharing  which  ultimately  took  the  form  of  a  divi- 
dend to  employees  of  a  moiety  of  all  profits  over 
ten  per  cent.  It  was  abandoned  in  1874  because 
trade  unionists  were  debarred  from  profit- 
sharing. 

In  1867  John  and  Henry  Grwynne,  engineers, 
of  Hammersmith,  agreed  to  divide  among  their 
employees  (who  were  to  be  non-union  men)  a 
cash  bonus  equal  to  ten  per  cent,  on  profits. 
This  was  abandoned  as  unsatisfactory  after 
three  years. 

In  1868  the  shareholders  of  Prices'  Patent 
Candle  Company,  Ltd.,  at  Battersea,  authorized 
the  directors  to  distribute  among  employees  one 
third  of  the  profits  above  a  minimum  sum  fixed 
by  the  company.  In  1872  the  employees  de- 
manded a  nine-hours '  day,  which  was  conceded, 
and  the  profit-sharing  scheme  was  withdrawn. 

In  1872  Troughton  &  Simms,  instrument- 
makers,  of  London,  tried  profit-sharing  for  one 
year,  and  abandoned  it  because  the  majority  of 
the  employees  appeared  indifferent  to  it. 

In  1872  Spottiswoode  &  Company,  printers,  of 
London,  adopted  a  profit-sharing  scheme  under 
which  half  of  the  surplus  profits  (over  a  fixed 
percentage)  were  divided  among  certain  em- 
ployees— an  average  of  three  hundred  and  fifty 


182     When  the  Workmen  Help  You  Manage 

in  number.  In  twelve  years  nearly  twenty  thou- 
sand pounds  was  distributed.  The  plan  was 
discontinued  in  1883  because  profits  fell  so  low, 
in  consequence  of  a  rise  in  wages  and  increased 
competition,  that  there  was  no  surplus  to  divide. 

In  1872  J.  Gimson,  engineers,  of  Leicester, 
introduced  profit-sharing,  but  discontinued  it  in 
1879,  when  the  profits  fell  below  the  minimum. 

Beginning  in  1872,  W.  Hill  &  Son,  bakers,  of 
London,  ''for  some  years"  paid  a  cash  bonus  to 
its  employees  out  of  profits,  but  found  no  im- 
provement in  the  men,  and  therefore  abandoned 
the  practice. 

In  1873  John  Thomasson  &  Son,  cotton  spin- 
ners, of  Bolton,  gave  a  cash  bonus.  In  the 
fourth  year  following,  the  bonus  was  nil.  The 
firm  declared  that  improvement  in  work  was 
also  nil,  and  abandoned  the  scheme. 

In  1873  Joshua  Hoyle  &  Sons,  cotton  weavers, 
of  Bacup,  on  conversion  into  a  joint  stock  com- 
pany, reserved  a  certain  amount  of  stock  as 
''industrial  partnership  shares,"  and  advanced 
money  to  enable  employees  to  purchase.  The 
scheme  was  popular  in  prosperous  times,  but 
"with  reduced  dividends  its  popularity  waned," 
and  in  twenty  years  it  had  fallen  to  virtual 
desuetude. 

In  1874  Charles  Rowley  &  Company,  Ltd., 


Why  Profit-Sharing  Fails  183 

carvers  and  gilders,  of  Manchester,  allowed  its 
employees  to  take  up  shares,  and  paid  such  an 
annual  bonus  on  wages  as  ' '  could  be  afforded. ' ' 
The  system  was  abandoned  in  1876,  because 
many  employees  ''took  advantage  of  a  rise  in 
the  market  price  of  shares  and  sold  out  at  a 
profit. ' ' 

The  foregoing  are  characteristic  cases  of  the 
vicissitudes  of  profit-sharing  enterprises  in  the 
course  of  ordinary  business.  They  are  largely 
taken  from  the  '60 's  and  70 's,  when  England 
felt  the  profit-sharing  urge.  I  might  give 
dozens  of  other  cases ;  but  if  considerably  more 
than  half  of  the  firms  who  have  taken  up  the  idea 
abandoned  it  after  a  trial  of  a  few  years,  it 
seems  safe  to  conclude  that  it  is  not  a  panacea. 
Of  those  who  have  kept  on  with  it,  the  gas  com- 
panies show  the  longest  life ;  but  with  them  the 
circumstances  are  exceptional. 

The  outstanding  example  is  the  South  Metro- 
politan Gas  Company,  of  London.  Under  an 
act  of  Parliament,  the  company  is  entitled  to 
pay  a  dividend  of  four  per  cent.,  and  to  charge 
three  shillings  and  onepenny  per  thousand  cubic 
feet  of  gas.  As  an  inducement  to  economy  and 
lower  prices,  the  act  further  authorizes  an 
additional  dividend  of  two  shillings  and  eight- 
pence  per  cent,  for  each  reduction  of  onepenny 


184     When  the  Workmen  Help  You  Manage 

in  the  price  of  gas.  That  is,  the  dividends 
depend  upon  how  cheaply  the  gas  is  sold.  To 
help  in  this  economy,  the  company  agrees  to  pay 
each  employee  three  quarters  per  cent,  extra 
for  each  penny  reduction  in  the  gas  price.  The 
company  has  gone  as  low  as  elevenpence  below 
the  standard  price,  which  means  an  employee's 
dividend  of  eight  and  one  quarter  per  cent. 

The  percentage  of  bonus  has  been  revised 
several  times,  and  instead  of  paying  in  cash,  one 
half  of  the  bonus  is  now  invested  in  the  stock 
of  the  company  and  receives  dividends  on  the 
same  basis  as  that  of  the  investing  shareholders. 
The  plan  has  been  in  operation  since  1889,  and 
there  has  always  been  a  dividend  until  the  war 
years,  when,  the  price  of  gas  rising  to  the  stand- 
ard limit,  the  bonus  ceased.  The  history  of  the 
experiment  is,  therefore,  not  completed,  because 
no  profit-sharing  plan  can  be  said  to  have 
proved  its  success  until  it  has  passed  through  a 
period  of  ''no  profits."  But  it  will  be  observed 
that  in  this  case — which  is  always  cited  as  one 
of  profit-sharing — there  is  no  real  profit-shar- 
ing, but  a  bonus  on  economy.  The  men  are  not 
paid  because  of  the  profits;  neither  does  the 
amount  depend  upon  the  profits :  they  are  paid 
for  the  reduction  of  costs. 

Another  English  scheme  of  considerable  note 


Why  Profit-Sharing  Fails  185 

is  that  of  Lever  Brothers,  the  soap-makers  of 
Port  Sunlight,  where,  in  addition  to  very  elabo- 
rate welfare  work,  the  firm  has  a  co-partnership 
organization.  After  four  years  of  service,  any 
employee  who  is  above  the  age  of  twenty-two 
years  receives  an  allotment  of  certificates  ac- 
cording to  a  rating  of  ability.  Slackers  get 
nothing,  and  enthusiastic  workers  receive  ten 
per  cent,  or  even  more.  New  certificates  are  al- 
lotted each  year  until  a  maximum  of  from  two 
hundred  pounds  to  three  thousand  pounds  is 
held — the  limit  depending  upon  the  rates  of 
wages.  Dividends  are  paid  upon  these  certifi- 
cates in  shares  of  the  company,  and  the  recipi- 
ents may  either  sell  these  shares  in  the  open 
market  or  retain  them  and  receive  a  five  per 
cent,  dividend.  If  an  employee  leaves  the  com- 
pany his  certificates  are  canceled,  unless  he  re- 
tires from  old  age,  when  he  goes  upon  the  pen- 
sion list  and  receives  five  per  cent,  stock  in  ex- 
change. 

The  many  American  plans  that  are  in  opera- 
tion at  the  present  time  are  variations  of  the 
English  plans.  In  some  cases  the  company  sets 
aside  a  proportion  of  the  profits  and  pays  a 
bonus  in  cash ;  in  others  the  payment  goes  into 
a  fund,  which  is  held  until  a  certain  date  or  con- 
tingency, or  which  is  treated  as  an  interest-bear- 


186     When  the  Workmen  Help  You  Manage 

ing  deposit  and  the  interest  paid.  In  most 
cases  there  are  provisions  limiting  participa- 
tion until  after  a  fixed  number  of  years  of  serv- 
ice, and  also  providing  for  forfeiture. 

It  is  not  unusual  for  a  profit-sharing  plan  to 
be  in  force  among  the  executives  of  a  company, 
or  even  among  the  superintendents, — I  have  in 
mind  several  cases  where  the  shares  of  profit 
annually  exceed  the  salaries, — but  I  do  not  in- 
clude these  plans  because  they  have  nothing  to 
do  with  profit-sharing  as  a  solution  for  labor 
troubles.  Neither  do  I  include  the  provision  of 
facilities  for  the  purchase  of  stock,  as  in  the 
case  of  the  United  States  Steel  Company;  for 
this  is  a  matter  of  thrift  promotion  through  in- 
vestment, and  is  not  profit-sharing:  the  man  is 
paid  on  what  he  invests,  and  his  interest  is  not 
that  of  the  worker,  but  of  the  capitalist. 

If  you  will  examine  virtually  any  plan  of  pay- 
ment that  goes  under  the  name  of  profit-sharing, 
you  will  discover  that  there  is  little  or  nothing 
of  real  co-partnership;  but,  boiled  down,  the 
plan  resolves  itself  into  a  gratuity  system  or,  at 
the  best,  a  bonus  system.  The  workers  who 
contribute  their  labor  are  never  on  a  plane  with 
the  stockholders  who  put  in  their  money. 

The  only  real  profit-sharing  plan  that  has 
ever  come  to  my  notice  is  one  which  has  been 


Why  Profit-Sharing  Fails  187; 

operating  for  some  years  in  Germany.  The 
owner  of  a  large  optical  instrument  works  willed 
the  entire  property  to  the  workers.  There  are 
no  stockholders  at  all.  The  various  employees 
receive  wages  or  salaries  according  to  their 
abilities,  as  in  any  establishment ;  but  at  the  end 
of  the  year  the  profits  are  divided  per  capita — 
the  general  manager  gets  a  large  salary,  but  his 
share  of  the  annual  profits  is  exactly  the  same  as 
the  office-boy's.  That  is  real  profit-sharing  and 
real  co-partnership.  Yet  it  is  decidedly  im- 
practical for  adoption  by  industry  as  a  whole. 

What  I  object  to  in  the  average  profit-sharing 
plan  is  a  lack  of  sincerity.  Instead  of  recogniz- 
ing that  capital  and  labor  are  different  enti- 
ties, each  entitled  to  a  wage,  and  that  the  prob- 
lem is  to  balance  that  wage,  the  profit-sharing 
plans  seek  to  obscure  that  relation  by  saying  to 
the  worker:  ''You  are  first  entitled  to  a  wage 
as  a  worker ;  and  next  you  are  entitled  to  a  wage 
as  a  capitalist." 

When  the  share  of  the  worker  is  invested  in 
the  securities  of  the  company — when  he  buys 
his  way  into  the  company — he  does  stand  as  a 
capitalist;  but  few  human  beings  care  to  have 
their  investments  forced  upon  them,  and,  purely 
from  an  investing  point  of  view,  it  would  be  bet- 
ter for  him  to  have  his  surplus  in  some  other 


188    When  the  Workmen  Help  You  Manage 

company  rather  than  to  stand  or  fall  entirely 
upon  the  progress  of  his  own  concern. 

In  effect,  in  instituting  the  system  the  em- 
ployer says  to  his  men : 

' '  The  wage  system  has  failed ;  your  wages  are 
not  large  enough.  I  do  not  know  how  to  adjust 
them  according  to  your  worth,  so  I  will  say  that 
you  are  responsible  for  the  profits  and  will  pay 
you  a  rake-off  on  them.'^ 

But  what  the  employer  generally  has  in  mind 
is  more  like  this : 

"We  are  making  big  profits,  and  if  your  at- 
tention is  called  to  them  you  will  want  higher 
wages.  Instead  of  giving  you  those  wages  now, 
and  perhaps  running  into  a  period  in  the  future 
when  profits  will  not  be  so  large,  I  shall  take 
your  mind  off  the  profits  by  declaring  that  they 
are  yours  as  well  as  mine.  I  know  that  they 
are  not,  but  I  must  keep  you  happy  and  at 
work. ' ' 

As  I  pointed  out  in  an  earlier  chapter,  nothing 
is  to  be  gained  by  dodging  the  relation  of  capi- 
tal and  labor.  The  trade  unions  dislike  all 
bonus  and  profit  schemes  because  of  this  evasive 
quality,  and  the  only  union  man  whom  I  have 
known  to  favor  the  idea  is  the  English  leader, 
Mr.  J.  P.  Thomas,  and  he  takes  a  very  different 
ground  from  the  employer.    Mr.  Thomas  says : 


Why  Profit-Sharing  Fails  189 

*^The  basic  element  of  profit-sharing  is  that, 
first  of  all,  the  worker  receive  at  least  a  stand- 
ard rate  of  wages.  There  should  be  no  question 
as  to  that;  therefore  I  do  not  see  why  trade 
unions  should  be  at  all  opposed  to  the  system. 
In  addition  to  the  wages,  the  income  of  the  em- 
ployee is  increased  by  a  share  in  any  profit  that 
may  accrue. 

* '  In  profit-sharing  or  co-partnership  the  capi- 
talist must  yield  the  right  of  keeping  all  the 
profits  for  himself.  He  must  not  expect  that 
Labor  will  cease  to  make  demands  for  high 
wages,  or  that  it  will  cease  to  organize  or  com- 
bine or  belong  to  trade  unions  as  freely  as  it 
desires.  On  the  other  hand,  Labor  must  not 
expect  that  Capital  will  cease  to  manage,  to  ad- 
ministrate, to  organize,  and  functionalize,  or 
generally  to  conduct  business." 

The  thought  of  this  leader  is  that,  after  re- 
ceiving the  highest  possible  wages,  labor  is  still 
entitled  to  dip  into  the  receipts  of  capital,  re- 
gardless of  right,  and  probably  in  the  way  of 
granting  capital  the  right  to  exist.  The  nub 
of  the  whole  idea  is  that  labor  should  have 
something  out  of  all  the  money  that  is  going 
about. 

But  suppose  that  no  money  is  going  about? 
Take  the  experience  of  Mr.  Hugo  Hirst,  the 


190     When  the  Workmen  Help  You  Manage 

chairman  and  managing  director  of  the  General 
Electric  Company  in  England : 

''I  have  personally,  as  far  back  as  twenty 
years  ago,  made  my  first  attempt.  My  inten- 
tion was  to  try  it  in  a  modest  way,  and  if  suc- 
cessful to  extend  it.  I  failed.  In  our  then 
existing  Articles  of  Association,  I  provided  that 
ten  per  cent,  of  all  profits,  after  an  interest  on 
debenture  and  preference  share  capital  had 
been  paid,  should  be  given  as  a  bonus  to  mem- 
bers of  the  staff.  For  three  or  four  years  it 
worked  successfully;  but  it  must  be  borne  in 
mind  that  during  those  four  years  the  company 
showed  progressive  results. 

''About  1904,  through  no  fault  of  the  manage- 
ment, staff,  or  workpeople,  a  period  of  depres- 
sion set  in  for  the  electrical  industry.  The  net 
results  of  the  company  receded,  with  the  result 
that  those  entitled  to  bonuses  received  less. 
With  scarcely  any  exception,  I  met  with  dissatis- 
faction and  grumbling.  Every  man  protested 
he  worked  quite  as  hard,  even  harder,  as  the 
times  were  difficult,  and  each  -one  assured  me 
that  the  less  favorable  results  of  the  company 
were  not  due  to  him,  and  each  made  a  point  that 
his  mode  of  living,  his  expenditure,  or  his  hope 
of  saving  were  calculated  on  the  bonus  for  that 


Why  Profit-Sharing  Fails  191 

year  not  being  less  than  that  of  the  previous 
year. 

''The  dissatisfaction  and  unrest  created  by 
the  reduced  bonus  became  so  apparent  that 
there  was  only  one  thing  for  me  to  do.  I  com- 
pounded the  maximum  bonus  of  each  man  with 
his  salary,  and  stopped  further  bonuses  to  all 
members  who  were  in  receipt  of  a  salary  of  less 
than  four  hundred  pounds  a  year.  The  man  re- 
ceiving above  four  hundred  pounds  per  annum 
I  continued  to  give  bonuses,  but  at  no  fixed  per- 
centage. The  bonus  was  an  amount  given  at  the 
discretion  of  the  directors,  in  accordance  with 
the  result  of  the  particular  department  in  which 
the  employee  was  working,  leveled  up  or  down 
more  or  less  generously,  according  to  the  results 
of  the  year  as  a  whole." 

Take  this  very  able  exposition  of  the  essential 
unsoundness  as  given  by  Mr.  J.  W.  Sullivan,  of 
the  International  Typographical  Union  : 

''Uncertainty  is  a  disturbing  factor  in  profit- 
sharing — uncertain  as  to  whether  there  ought  to 
be  profits  from  year  to  year,  uncertainty  as  to 
what  the  profits  actually  may  be  in  any  one  year, 
uncertainty  on  the  part  of  the  employees  as  to 
the  employer  revealing  his  true  profits,  uncer- 
tainty as  to  the  settled  proprietorship  of  the  es- 


192     When  the  Workmen  Help  You  Manage 

tablishment.  In  these  uncertainties  it  is  seen 
that  the  interests  and  expectations  of  a  force  of 
laborers  are  constant, — the  highest  obtainable 
level  in  wages,  hours,  and  working  conditions, — 
while  the  purposes  of  coming  and  going  employ- 
ers are  variable,  including  selling  out,  either  at 
a  sacrifice  or  at  a  boom  profit. 

*'In  this  unsettled  profit-sharing  there  usually 
can  be  no  hand-in-hand  partnership  of  Labor 
and  Capital.  The  two  interests  work  strictly 
apart,  each  in  its  accustomed  sphere.  Capital 
sees  an  opportunity,  undertakes  an  enterprise, 
buys  site  and  plant,  decides  upon  the  scale  of 
productions,  manages  the  workshops,  watches 
the  markets,  pushes  sales,  enlarges  or  dimin- 
ishes the  works,  runs  the  risks — in  all  respects 
making  the  mistakes  or  supplying  the  strokes  of 
talent  that  count  in  management.  The  indus- 
trial wage-working  employee,  while  supplying 
the  essential  factor  of  more  or  less  skilled  ma- 
nipulation of  matter  resulting  in  concrete  pro- 
duction, projects  no  effort  into  the  field  of  plan, 
production,  purchase,  and  distribution.*' 

My  own  observation  of  profit-sharing  exactly 
coincides  in  practice  with  the  experience  of  Mr. 
Hirst,  and  my  theory  with  Mr.  Sullivan.  I 
have  yet  to  discover  any  plan  that  did  not  fail 
when  the  profits  ceased  to  exist,  or  even  when 


Why  Profit-Sharing  Fails  193 

they  diminished;  and  those  plans  that  have 
operated  through  many  years — and  there  are 
such — will  usually  be  found  to  depend  upon  the 
continuous  success  of  some  specialty  business  or 
upon  the  personality  of  the  owner.  Profit- 
sharing  can  not  be  a  panacea,  because  only 
twenty  per  cent,  of  conunercial  adventures  show 
a  profit.  Before  one  can  depend  upon  profit- 
sharing  to  adjust  labor  trouble,  one  must  be 
assured  of  a  profit.  How  many  concerns  will 
tie  themselves  to  a  plan  in  which  they  are  bound 
to  guarantee  a  profit  forever  and  a  day  1 

If,  then,  profit-sharing  is  not  a  panacea,  is  it 
an  irritant? 

My  own  experience  is  that  any  periodical  pay- 
ment that  is  not  directly  connected  with  the 
work  in  hand  is  somewhat  of  a  mystery  to  the 
average  worker.  He  does  not  know  how  or 
why  profits  are  made.  He  does  not  understand 
how  it  can  be  that,  after  he  has  done  his  work 
well,  a  drop  in  the  market  price  of  raw  material 
may  compel  his  firai  to  sell  at  a  price  lower  than 
cost.  And  he  will  not  readily  consent  to  a  de- 
preciation in  his  own  earnings  because  of  this 
outside  happening. 

I  recall  one  company  that  lost  money  by  sell- 
ing too  much  in  distant  markets  where  the  pack- 
ing and  transportation  absorbed  more  than  the 


194     When  the  Workmen  Help  You  Manage 

profit  on  the  goods  sold.  Should  the  worker 
who  made  those  goods  be  penalized  for  an  exec- 
utive's dearth  of  accounting  acumen?  Or  why 
should  the  worker  in  an  establishment  loaded 
down  with  too  large  a  mortgage  be  at  a  disad- 
vantage with  the  man  who  is  employed  in  a  place 
that  has  no  funded  debt?  The  interest  on  the 
debt  has  to  be  paid  before  profits  can  be  calcu- 
lated. 

Or,  again,  why  should  a  premium  in  the  way 
of  labor  payment  be  given  to  the  concern  that 
does  not  set  up  proper  reserves?  A  company 
setting  up  reserves  will  not  be  able  to  distribute 
as  much  money  as  the  improvident  one — but  it 
will  last  longer. 

The  worker  takes  his  share  of  profits  or  bonus 
as  an  addition  to  wages,  and  he  fixes  his  stand- 
ard of  living  in  accord  with  the  highest  rate, 
making  no  provision  for  a  lower  rate.  As  long 
as  the  rate  keeps  up,  he  is  content  to  take  the 
money;  but  he  is  bound  to  be  troubled,  and 
lience  dissatisfied,  when  the  rate  goes  down — 
and  if  the  scheme  is  honest  the  rate  must  fluctu- 
ate.    War  years  can  not  last  forever. 

When  the  rate  does  go  down  he  is  fair  prey 
for  the  agitator;  and  because  he  does  not  under- 
stand why  or  how  the  profits  were  made,  or  why 


Why  Profit-Sharing  Fails  195 

or  how  the  losses  were  incurred,  he  is  ready  to 
believe  that  he  is  the  victim  of  some  game. 

I  take  it  as  axiomatic  that  any  remuneration 
of  a  fluctuating  character,  and  derived  from  a 
source  unknown  to  the  recipient,  must  be  a  cause 
of  eventual  trouble. 

Is  it  not  better  to  meet  the  real  question 
squarely! 

We  all  know  that  the  efficiency  of  labor  is  only 
one  of  the  several  factors  that  go  to  make  up 
successful  business.  It  is  the  most  important 
factor  in  that,  if  the  labor  situation  is  right,  it 
will  take  some  masterly  stupidity  to  lose  money. 
But  masterly  stupidity  exists — and  always  will 
exist. 

The  worker  should  be  paid,  not  a  share  of  the 
earnings  of  capital,  but  for  his  contribution; 
and  he  is  not  entitled  to  have  his  contribution 
lessened  or  augmented  in  money  value  by  reason 
of  any  force  outside  of  himself.  That  is,  he  is 
to  be  paid  for  what  he  does,  and  not  for  what 
any  one  else  may  do  for  him.  If  the  company 
dividend  is  very  large,  the  wages  probably  are 
too  low.  But  if  that  great  profit  is  due  solely 
to  exceptional  managerial  skill,  then  it  is  capi- 
tal, and  not  labor,  that  is  entitled  to  the  reward. 
And  if  labor  knows  how  and  why  that  profit 


1^6     When  the  Workmen  Help  You  Manage 

was  made,  it  will  be  content  with  its  reasonable, 
fair  share. 

Because  profit-sharing  is  a  term,  and  not  an 
actuality,  it  can  not  satisfy.  Any  plan  that  is 
ill  founded  in  theory  is  destined  to  fail  in  prac- 
tice, and  I  have  always  found  that  the  monetary 
rewards  paid  under  the  guise  of  profits  produce 
neither  the  production  nor  the  contentment  of 
money  that  is  frankly  paid  for  what  it  is.  If 
you  pay  a  man  for  the  quality  and  quantity  of 
his  production,  or  for  the  amount  that  he  saves 
in  production,  he  knows  the  reason  for  his 
money,  and  he  knows  that  it  is  up  to  him  to  make 
more.  He  does  his  work  and  he  gets  his  re- 
ward. He  gets  the  reward  so  nearly  coincident 
with  the  work  that  there  is  no  loss  of  connection 
between  the  two.  Before  him  is  something  defi- 
nite— the  exact  reward  that  he  will  have  for  a 
certain  service  to  capital. 

But  under  any  scheme  of  profit-sharing  the 
profits  can  not  rightly  be  ascertained  oftener 
than  quarter-yearly,  and  are  more  accurately 
calculated  on  an  annual  basis.  Few  men  can 
associate  their  work  in  January  with  a  payment 
in  the  next  July  or  January.  There  is  no  incen- 
tive, in  the  average  worker,  to  labor  hard  to- 
day for  some  coins  that  he  can  not  see  for  six 
or  twelve  months  and  the  number  of  which  he 


Why  Profit-Sharing  Falls  197 

can  not  know  until  then.  The  company  divi- 
dend and  his  own  work  have  no  connection,  and, 
because  of  the  many  other  factors  entering  into 
that  dividend,  they  can  have  no  dramatic  rela- 
tion. Hence  he  works  without  the  idea  of  any 
extra  pajnnent  in  mind,  or,  if  he  does  have  it  in 
mind,  he  will  soon  get  it  out  of  mind  when  he 
sees  his  fellows  doing  poor  work  and  yet  expect- 
ing to  get  the  same  extra  payment  that  he  gets. 
The  natural  impulse  is  to  drift  into  mediocrity. 
Under  a  wage  system  the  results  are  to  be  had 
by  adjustment — ^by  taking  the  proper  represen- 
tatives of  the  workers  into  confidence  and 
frankly  discussing  all  the  facts.  In  most  profit- 
sharing  plans  the  employer  is  not  fooling  the 
workers;  he  is  fooling  himself.  The  worker 
will  be  around  for  more  wages  the  moment  that 
the  share  of  profits  drops — and  he  will  be 
around  in  no  happy  mood. 


CHAPTER  X 

STRIKING   THE   BAJLANCE   BETWEEN    OAPITAL  AND 
LABOR 

In  an  earlier  chapter  I  pointed  out  the  neces- 
sity of  clearly  comprehending  that  a  solution  of 
the  difficulties  between  the  employer  and  the 
employee  is  to  be  had  only  in  the  scientific  en- 
gagement of  capital  and  labor. 

First  let  us  define  ''scientific."  The  science 
that  I  mean  is  the  application  to  the  particular 
set  of  facts  of  the  knowledge  gained  by  syste- 
matic observation,  experimenting,  and  reason- 
ing, and  the  further  coordination  and  arrange- 
ment of  that  knowledge  in  view  of  the  facts 
gained  in  the  particular  investigation. 

I  can  not  too  strongly  emphasize  that  the  sci- 
entific engagement  of  capital  and  labor  is  not 
the  pressing  of  either  of  them  into  some  mold 
already  made.  The  old  medical  practitioner  ex- 
amined his  patient,  let  forth  a  torrent  of  learned 
gibberish  corresponding  to  the  incantation  of 
still  earlier  times,  and  then  always  decided  to  let 
some  blood.     The  palaver  was  whatever  he  hap- 

198 


Balance  Between  Capital  and  Labor     199 

pened  to  have  on  his  mind  at  the  moment;  the 
remedy  was  always  the  same — whether  the  pa- 
tient had  smallpox  or  gout.  The  best  of  the 
modern  practitioners  have  no  jargon  and  n«. 
fixed  remedies ;  they  make  a  most  careful  diag- 
nosis with  the  aid  of  the  laboratory,  and  then  go 
forward,  usually  somewhat  slowly,  to  the  cor- 
rection of  the  specific  diseases  or  derangements 
Indicated.  Only  the  quack  prescribes  the  same 
remedy  for  every  disease. 

It  is  the  same  with  the  prescriptions  for  in- 
dustrial diseases :  there  are  no  sovereign  reme- 
dies— there  is  no  one  bottle  to  dose  from.  In- 
stead, the  remedies  are  to  be  applied  only  as  the 
diagnosis  proceeds,  and  then  gently,  ever  with  a 
readiness  to  acknowledge  a  mistake  and  to  make 
a  correction. 

I  marvel  at  the  temerity  of  those  who  instal  a 
system  one  month  and  get  out  a  pamphlet  on 
its  perfection  during  the  next  month.  Adjust- 
ments of  value  are  not  made  in  any  such  fashion. 
Of  course,  the  first  distribution  of  profits  is  al- 
ways a  success — so  is  the  distribution  of  Chris- 
mas  turkeys  or  any  other  largesse.  It  takes  a 
genius  to  achieve  unpopularity  while  in  the  act 
of  giving  something  for  nothing. 

What  we  are  aiming  at  is  the  proper  reward- 
ing and  mental  stimulation  of  both  capital  and 


200     When  the  Workmen  Help  You  Manage 

labor,  so  that  the  two  may  function  together 
to  the  best  advantage  and  exert  a  maximum  of 
brains  and  brawn. 

The  definition  of  science  and  the  statement  of 
the  object  dismiss  at  once  the  possibility  of  hav- 
ing a  rigid  plan,  and  emphasize  the  desirability 
of  having  only  a  few  guiding  principles,  about 
which  the  knowledge  gained  by  investigation  is 
to  be  grouped. 

Each  industrial  unit  has  an  individuality  and 
a  personality,  which  are  to  be  studied  and 
treated  on  a  purely  individual  basis.  In  one 
town  I  had  as  clients  four  plants,  each  making 
precisely  the  same  article ;  but  the  varied  per- 
sonalities and  traditions  of  these  factories  com- 
pelled me  to  devise  four  quite  dissimilar  plans 
in  order  that  each  company  might  have  the  ulti- 
mate in  resource.  In  the  course  of  time  those 
four  plants  may  come  around  to  more  or  less  the 
same  methods;  but  had  they  been  forced  into 
identical  molds  at  the  outset,  each  would  have 
lost  some  features  that  were  worth  preserv- 
ing. 

I  am  not  an  advocate  of  that  sort  of  revolu- 
tion which  overturns  the  good  and  the  bad  to- 
gether, and  neither  do  I  believe  in  the  elimina- 
tion of  individuality  through  drab  uniformity. 
Most  people,  for  instance,  are  comfortable  in 


Balance  Between  Capital  and  Labor     201 

low  collars;  but  there  are  not  a  few  who  like 
tall  collars.  It  is  quite  the  same  with  indus- 
trial organizations. 

Insisting  that  all  wear  the  same  height  of  col- 
lar— presumably  an  average  height — merely 
means  that  no  one  will  be  quite  comfortable. 

In  the  proper  scheme  of  industry,  the  vital 
force  of  individuality,  both  in  the  employer  and 
in  the  employees,  is  to  be  fostered  and  not 
curbed.  When  we  curb  individuality  we  also 
stifle  originality,  and  make  for  a  dead  level,  such 
as  England  was  threatened  with  before  the  war, 
on  account  of  the  equality  notions  of  the  trades 
unions. 

The  principles  do  not  change,  but  the  appli- 
cation ever  varies.  The  manufacturer  who  ex- 
amines into  any  successful  plan  in  the  hope  that 
he  can  buy  something  ready  made  and  fit  to 
wear  is  bound  to  have  his  trouble  for  his  pains. 
It  would  be  a  calamity  for  him  to  take  a  ready- 
made  plan,  even  though  it  did  offer  the  alluring 
inducement  of  being  capable  of  being  installed 
overnight  and  without  further  thought.  An- 
other type  of  individual  may  examine  a  plan 
and  dismiss  it  with  the  usual  ''Yes,  it  seems 
very  good ;  but  my  business  is  different. ' ' 

Neither  man  has  the  right  view.  The  plan 
could  not  be  good  in  toto  for  the  first  man,  but 


202     When  the  Workmen  Help  You  Manage 

a  will  certainly  have  some  features  that  both 
men  might  well  study.  The  real  search  should 
be  for  ideas,  and  not  for  plans.  The  ideas  are 
but  clay — raw  material  for  the  modeler  to  spend 
many  hours  with.  The  ordeal  of  clear,  con- 
structive thought  is  not  to  be  avoided. 

With  this  introduction,  let  me  describe  two 
very  dissimilar  experiments  that  I  now  have  in 
process.  They  are  both  intentionally  being 
kept  plastic,  to  admit  of  changes  as  events  seem 
to  require.  They  will  serve  to  illustrate  not 
only  the  necessarily  "catlike"  approach,  but 
also  how  the  ' '  labor  problem ' '  ramifies  through 
every  branch  of  the  enterprise.  In  each  case 
the  fundamental  thought  is  eventually  to  gain  a 
working  arrangement  between  the  men  and  the 
company  that  will  seem  fair  to  each. 

The  first  case  is  that  of  a  machine-shop  man^u- 
faoturing  automobile  transmissions.  The  cus- 
tomers are  a  few  large  concerns  that  will  take 
any  amount  of  output,  provided  the  prices  are 
reasonable.  This  is  a  clear  case  of  production 
controlling  profit.  The  contracts  cover  long  pe- 
riods of  time,  and  altogether  it  is  a  x^roduction 
rather  than  a  selling  adventure.  It  is  essential 
at  the  beginning  to  determine  whether  the  fac- 
tory or  the  selling  force  controls — not  for  the 
purpose  of  rewarding  the  one  and  neglecting  the 


Balance  Between  Cajntal  and  Labor     203 

other,  but  to  discover  what  is  the  real  motive 
power. 

An  automobile,  for  instance,  is  a  mixed  manu- 
facturing and  selling  proposition;  you  can  not 
continue  to  sell  a  poorly  made  car,  but  neither 
can  you  find  a  broad  market  for  a  first-class  car 
unless  it  be  well  sold.  Ordinary  canned-food 
products  are  selling  propositions ;  the  qualities 
vary  to  a  great  degree,  but  almost  any  canner, 
with  the  will,  can  get  out  a  first-class  article — it 
is  the  manner  of  selling  that  brings  the  sales. 

This  plant  had  the  usual  run  of  local  labor 
troubles — high  wages  and  poor  performance,  a 
great  deal  of  spoilage,  and,  consequently,  a 
small  profit.  The  labor  turnover  was  high,  but 
no  bad  strikes  had  occurred. 

The  problem  I  faced  was : 

(1)  To  make  more  money  for  the  owners 
without  raising  the  price  of  the  product  beyond 
that  justified  by  the  current  cost  of  labor  and 
materials. 

(2)  To  enlist  the  interest  of  the  workers  so 
that  they  would  put  themselves  into  the  work 
and  realize  the  first  proposition. 

To  be  perfectly  frank,  I  did  not  start  with  any 
idea  of  creating  an  industrial  Utopia ;  there  was 


204     When  the  Workmen  Help  You  Manage 

no  propelling  force  other  than  enlightened  self- 
interest.  If  the  company  were  to  achieve  suc- 
cess, then  every  person  working  for  it  must  also 
achieve  success.  That  is,  the  company's  people 
must  have  a  good  reason  for  putting  their  brains 
into  the  works.  The  best  reason  would  be  the 
joining  of  every  person,  from  president  to  jan- 
itor, into  a  scheme  by  which  not  only  individual 
but  also  community  efforts  would  be  rewarded 
adequately.  The  adequacy  could  not  be  estab- 
lished by  assertion  alone,  but  by  the  reasoned 
consent  of  the  majority  of  those  involved. 

A  detailed  analysis  of  plant  expense  over  a 
period  showed  that  the  overhead,  or  shop  bur- 
den, per  hour  of  productive  labor  was  exceed- 
ingly high.  The  overhead  was  high  because  the 
efficiency  of  the  productive  labor  was  low.  The 
men  were  largely  on  piecework ;  but  there  is  no 
greater  mistake  than  to  suppose  that  simply  be- 
cause piece  rates  are  in  force  the  owner  is  only 
''paying  for  what  he  gets."  Unless  the  rates 
are  well  set  and  the  worker  knows  how  to  do  his 
work,  the  owner  will  be  paying  for  a  lot  more 
than  he  ''gets,"  for  the  shop  burden  will  be 
unduly  large  per  unit  of  production. 

The  first  step,  then,  was  to  ascertain  the  exact 
costs  per  unit  of  production  and  the  percentage 
of  overhead  to  the  productive  labor  hour.     The 


Balance  Between  Caintal  and  Labor     205 

second  was  to  teach  the  men  how  to  do  their 
work. 

My  engineers  took  certain  individuals  and  ex- 
plained to  them  exactly  what  we  wanted  to  do  in 
the  way  of  bettering  their  ability  to  make  wages. 

Take  a  typical  case.  This  workman  was  on  a 
simple  assembly,  and  did  an  average  of  four  a 
day,  at  the  rate  of  eighty  cents  apiece.  We 
thought  that  he  could  as  easily  do  ten  a  day,  and 
we  told  him  that  he  could  do  the  ten  without 
additional  effort.  To  him  the  additional  six 
meant  more  money.  He  said  he  was  willing  to 
try. 

We  had  ten  sets  of  parts  placed  on  his  table 
the  next  morning.  He  performed  in  his  usual 
manner  the  first  three  formal  operations  upon 
the  castings.  The  fourth  operation  consisted  of 
drilling  four  3/64-inch  holes  in  each  casting. 
He  picked  up  a  cas-ting  (weight  forty  pounds), 
and  started  over  to  a  drill-press  twenty-five 
feet  away.  We  stopped  him,  and  sent  for  a 
portable  drill.  He  had  never  tried  the  port- 
able, through  fear  of  breaking  the  drills.  Our 
man  drilled  several  holes,  and  then  the  workman 
did  likewise — in  one  quarter  of  the  old  time. 

Another  operation  was  the  affixing  of  brass 
locks.  This  workman  had  formerly  gone  to  the 
stock-room  for  them.    We  had  them  brought  to 


206     When  the  Workmen  Help  You  Manage 

him,  thus  saving  more  time.  After  each  opera- 
tion the  process  was  talked  over  and  unneces- 
sary movements  eliminated.  In  spite  of  the 
time  consumed  in  explanation,  the  ten  assem- 
blies were  finished  and  on  their  way  to  the 
paint-shop  at  five  o'clock — although  formerly 
he  had  just  been  able  to  finish  the  four  by  five- 
thirty  ! 

This  man  thought  that  a  new  rate  of  thirty- 
five  cents  would  be  right  for  the  assemblies  un- 
der the  improved  methods.  We  made  the  rate 
forty  cents,  so  that  if  he  made  ten  a  day  he 
would  earn  eighty  cents  more  than  under  the 
old  schedule.  Within  a  short  time  he  was  aver- 
aging thirteen  a  day,  and  with  less  effort  and 
fatigue  than  before — and  he  was  constantly  on 
the  lookout  for  ways  further  to  increase  his  pro- 
duction without  affecting  its  quality. 

The  overhead  cost  on  this  man  was  forty  cents 
an  hour,  or  four  dollars  a  day.  Making  four 
assemblies  a  day  at  the  eighty-cent  rate  gave 
him  a  wage  of  three  dollars  and  twenty  cents, 
and  a  resulting  cost  to  the  company  of  one  dollar 
and  eighty  cents  for  each  piece.  When  he  made 
thirteen  assemblies  a  day  the  burden  expense 
was  no  greater,  but  his  wages  were  five  dollars 
and  twenty  cents,  while  the  cost  per  assembly 


Balance  Between  Capital  and  Labor    207 

to  the  company  was  only  seventy-one  cents. 
This  is  why  intelligently  high  wages  pay. 

My  engineers  went  through  the  whole  factory 
in  this  manner,  selling  our  ideas  as  we  went, 
not  forcing  them  forward,  and  making  sure  that 
no  man  made  more  money  simply  by  forcing. 
The  extra  money  had  to  be  earned  by  greater 
skill — by  eliminating  waste,  not  by  merely  add- 
ing brawn.  Nothing  is  to  be  gained  by  inducing 
spurts. 

We  did  not  at  the  outset  take  up  these  mat- 
ters with  shop  committees,  because  the  circum- 
stances were  such  that  the  selling  of  a  few  men 
(such  as  the  man  I  have  described)  helped  to 
sell  the  whole  force.  Had  there  been  opposition 
we  should  possibly  have  worked  up  through 
committees ;  but  it  is  better  to  educate  the  peo- 
ple and  fix  rates  ahead  of  the  formation  of  rates 
connnittees,  so  that  when  those  bodies  do  come 
into  being  they  will  already  have  a  knowledge 
of  rate-fixing  and  waste  elimination. 

Thus  far  I  have  discussed  the  remuneration 
of  the  worker  as  an  individual,  and  have  not 
related  him  to  the  company  or  to  his  fellows. 
I  am  not  in  favor  of  making  individual  compen- 
sation depend  solely  upon  community  effort. 
If  all  but  two  or  three  of  the  men  in  a  group  are 


266     When  the  Workmen  Help  You  Manage 

diligent,  then  the  indolent  will  be  forced  for- 
ward by  joint  rewards;  but  if  all  but  two  or 
three  are  indolent,  then  more  probably  the  in- 
dustrious ones  will  slack  down  to  the  lower  level. 
I  am  in  favor  of  stimulating  both  the  individual 
and  the  group  whenever  possible,  and  in  this 
case  it  was  possible. 

Now  for  the  community  reward.  The  indi- 
vidual can  not  do  his  best  alone.  Materials 
must  flow  to  him,  machines  must  be  cleared,  and 
processes  ahead  of  his  must  be  well  performed. 
If  preceding  operations  are  ill  done  it  will  take 
him  longer  to  do  his  own  work.  It  is  not  wise 
to  create  an  antagonism  between  departments 
on  account  of  the  bonus,  and  some  antagonism  is 
bound  to  result  if  one  group 's  share  happens  to 
be  cut  down  because  of  absences  or  slackness  in 
another  group.  This  is  the  ever-present  dan- 
ger in  having  the  community  bonus  of  one  de- 
partment depend  wholly  upon  the  work  of  an- 
other. You  will  recall  how  a  volunteer  fire  com- 
pany, in  the  old  days,  paid  more  attention  to  a 
rival  company  than  it  did  to  the  fire.  The  same 
sort  of  thing  may  happen  in  the  reckless  encour- 
agement of  inter-department  rivalry. 

The  community  reward  within  a  department 
is  obviously  based  on  what  it  accomplishes. 
The  exact  measure  of  that  accomplishment  is 


Balance  Between  Cajntal  and  Labor     209 

the  excess  of  production  or  quality  over  the 
standard.  In  the  factory  I  am  considering  the 
standards  were  fixed  in  the  course  of  the  rate 
adjustment,  and  were  thus  already  in  hand. 
Suppose  the  individuals  of  the  department  so 
exceed  the  standard  as  collectively  to  earn  a 
bonus  of  three  hundred  dollars.  The  depart- 
mental pay-roll  is  one  thousand  dollars,  and  the 
overhead  expense  is  one  hundred  and  fifty  per 
cent,  of  the  pay-roll,  or  fifteen  hundred  dollars. 
To  the  individually  earned  bonus  the  company 
adds  a  collective  bonus.  The  overhead  does  not 
go  up,  and  the  company  can  easily  afford  to  pay 
an  additional  three  hundred  or  six  hundred  dol- 
lars in  all  for  the  large  increase  in  production — 
as  was  demonstrated  in  the  man  making  the  as- 
semblies. 

It  is  quite  common  in  sharing  a  collective 
bonus  to  consider  only  one  class.  Sometimes 
only  the  executives  share,  while  again  only  the 
workers  share.  But  no  one  class  alone  makes 
the  increases.  Why  not,  then,  reward  accord- 
ing to  contribution?  The  workers  already  have 
three  hundred  dollars  for  themselves ;  give  them 
one  half  of  the  additional  three  hundred  dollars, 
and  distribute  the  balance  to  those  whose  plan- 
ning and  foresight  enabled  uninterrupted  work 
to  be  done.     To  further  inter-department  ac- 


210    When  the  Workmen  Help  You  Manage 

tion,  I  reserve  a  small  part  of  the  administra- 
tive bonus  for  the  preceding  department,  be- 
cause it  puts  the  work  through  so  expeditiously 
as  to  permit  the  second  department  to  function 
to  the  limit.  Since  the  succeeding  department 
would  also  pay  a  backward-looking  bonus,  the 
income  and  outgo  would,  roughly,  cancel  each 
other.  But  the  principal  point  is  that  the  so- 
called  non-productive  workers  in  a  department, 
such  as  the  foremen,  the  booth-men,  and  the 
truckers,  who  make  good  work  possible,  should 
share  in  the  reward. 

Thus  all  of  the  departmental  people,  in  one 
way  or  another,  have  had  a  cash  incentive  put 
up  to  them  and  the  opportunity  given  to  earn, 
over  and  above  a  guaranteed  living  wage,  a  sum 
sizable  enough  to  make  effort  worth  while.  The 
next  in  line  are  the  forces  of  general  adminis- 
tration. They  too  must  have  a  reward,  for 
without  their  skill  and  planning  the  workers 
could  not  exert  themselves.  The  more  one 
studies  business,  the  more  the  fact  stands  out 
that  the  different  departments  of  any  concern 
are  very  closely  related. 

I  find  it  possible  to  assign  many  of  the  sec- 
tions of  the  administrative  force  directly  to 
production  divisions.  The  tool-room,  for  in- 
stance, shares  in  the  administrative  bonus  of 


Balance  Between  Capital  and  Labor    211 

such  departments  as  it  serves,  and  thus  has  a 
direct  incentive  to  see  that  proper  tools,  of  the 
right  quahty,  are  quickly  provided.  The  ap- 
portionment of  the  tool-room  is  to  groups  where 
the  battery  arrangement  exists,  and  on  a  per- 
centage basis  where  the  machines  are  of  various 
kinds.  Whatever  the  disposal  of  the  machin- 
ery, some  right  basis  for  the  share  of  the  tool- 
room can  be  easily  found. 

The  store-room  is  treated  in  similar  fash- 
ion, and  so  on,  until  finally  the  only  administra- 
tors not  taken  into  account  are  the  superin- 
tendent, the  central  planning  department,  the 
cost  department,  and  a  few  others,  comprising 
all  together  a  trifling  proportion  of  the  whole 
factory  force. 

A  factory  administration  may  be  said  to  be 
successful  if  the  subordinate  departments  are 
successful,  and  not  otherwise.  It  is  logical  to 
pay  them  upon  the  total  factory  bonus.  They 
get  a  percentage  on  the  whole  bonus  earned  by 
the  entire  factory  distributed  in  proportion  to 
wages;  that  is,  the  proportion  that  each  wage 
bears  to  the  entire  administrative  wage. 

On  the  cash  side  of  the  wage  relation,  still  an- 
other factor  remains,  which  is  important — the 
wastage.  The  particular  concern  that  I  am  re- 
viewing does  not  pay  for  work  that  is  rejected; 


212     When  the  Workmen  Help  You  Manage 

bad  work,  therefore,  carries  its  own  penalty  in 
so  far  as  the  worker  is  concerned.  And  what  he 
loses  is  a  community  as  well  as  an  individual 
loss.  In  another  situation  it  might  be  desirable 
to  arrange  a  quality  bonus  and  pay  on  the  qual- 
ity;  but  that  does  not  happen  to  be  the  best  plan 
here. 

The  mere  withholding  of  pay  is  not  enough. 
That  prevents  a  loss  in  actual  wages  paid,  but 
the  overhead  goes  on  just  the  same,  and  the  com- 
pany is  out  the  material  and  the  wear  and  tear 
on  the  machinery — the  company  has  gone 
through  all  the  motions  of  production  and  stood 
most  of  the  expense,  but  has  nothing  to  show 
except  a  damaged  and  unsalable  article.  "Which 
brings  up  the  salvage  department. 

This  department  is  one  in  which  ingenuity 
counts  to  a  large  degree.  If  work  worth  at  cost 
two  thousand  dollars  goes  over  to  the  depart- 
ment  and  it  manages  to  get  one  thousand  dollars 
of  good  product  out  of  it,  obviously  it  is  to  thft 
interest  of  the  company  to  pay  a  bonus  calcu- 
lated on  the  value  of  the  work  saved.  My  staff 
contrived  such  a  bonus,  and  further  divided  it 
into  sections,  as  in  the  case  of  the  departmental 
production  bonus,  and  pays  a  part  to  the  admin- 
istrative side  exactly  as  before. 

But  one  material  point  remains.     The  worker 


Balance  Between  Capital  and  Labor     213 

can  save  by  producing  more  with  less  labor  and 
overhead  cost  per  nnit.  He  can  also  save  by 
the  economical  use  of  supplies,  such  as  oil, 
waste,  tool  steel,  and  the  like.  Our  analysis  of 
expense  gave  data  for  a  normal  and  for  an  ab- 
normal expense,  and  from  these  we  erected  a 
standard.  If  the  department  went  below  the 
standard  it  gets  an  additional  bonus.  It  makes  a 
difference  to  the  company  what  the  market  cost 
of  supplies  happens  to  be,  but  it  is  part  of  the 
duty  of  capital  to  stand  the  loss  on  the  market 
as  well  as  to  make  any  profit  therefrom — as  has 
been  previously  pointed  out.  The  workman  can 
not  control  the  market,  but  he  can  control  his 
own  waste  in  supplies.  His  reward  for  such 
control  is  not  to  be  denied. 

Thus  far  I  have  described  what  is  little  more 
than  the  accounting  machinery  to  reward  effort. 
It  remains  to  be  seen  that  the  rates  and  per- 
centages and  bonus  awards,  as  provisionally  set 
during  the  experimental  stage,  are  not  only 
right,  but  that  those  affected  by  them  think  that 
they  are  right.  And  here  it  is  that  representa- 
tion counts;  for  no  plan  is  good  unless  it  has 
features  for  insuring  continued  satisfaction. 
Representation  is  the  best  insurance. 

The  point  of  first  conflict  is  commonly  the 
determination  of  what  is  and  what  is  not  good 


214     When  the  Workmen  Help  You  Manage 

work — ^the  inspection.  Most  workers  consider 
inspectors  as  their  natural  enemies — as  cavilers 
set  up  by  the  management  to  defraud  honest 
men.  The  quickest  way  in  which  to  cure  this 
feeling  is  to  ask  the  workers  in  each  department 
to  form  committees  of  their  own,  and  to  decide 
disputes  for  themselves,  giving  the  right  to  re- 
move an  incompetent  inspector  and  elect  an- 
other. The  cases  in  which  they  will  elect  a  man 
who  promises  to  pass  bad  work  are  so  rare  as 
not  to  be  worth  consideration.  The  men  will 
kick  at  a  representative  of  the  boss,  but  not  at 
one  of  their  o^vn  number.  The  chief  danger  is 
that  their  appointee  will  lean  backward  in  an 
effort  not  to  appear  to  favor  his  friends.  This 
contingency  is  provided  for  by  an  appellate 
committee  of  the  whole  works  to  whom  serious 
differences  may  be  taken. 

Starting  with  the  inspection  committees,  we 
have  gone  forward  to  committees  on  rates,  on 
discharges,  on  complaints,  on  efficiency,  and  on 
absences,  and  are  now  working  toward  a  kind  of 
plant  congress  in  which  all  plant  questions  may 
come  up.  I  thoroughly  believe  that  power 
should  be  released  only  as  the  people  are  ready 
for  it,  and  not  all  at  once.  The  gradual  evolu- 
tion toward  the  democratic  ideal  preserves  in- 


Balance  Between  Capital  and  Labor     215 

terest  in  the  progression,  and  thus  makes  for 
success. 

It  is  too  early  to  say  how  great  is  the  success 
in  this  plant.  The  exactly  set  piece  rates  and 
the  bonus  payments  have  resulted  in  a  wage 
increase  of  about  forty  per  cent,  to  the  indi- 
viduals, and  at  the  same  time  the  production  has 
increased  in  an  even  greater  proportion.  The 
quality  of  the  goods  is  better,  and  their  cost  is 
so  much  lower  that  the  company  can,  when  the 
time  comes,  cut  its  sales  price  considerably 
without  asking  that  lower  wages  or  rates  be 
taken.  But  what  is  more  important  is  that  the 
labor  turnover  is  negligible,  and  the  men  are 
deeply  interested  not  only  in  their  work  but  in 
the  general  advancement  of  the  company's  in- 
terest. They  have  a  real  partnership  with  the 
company — one  based  on  work  and  not  on  a  pass- 
ing sentiment.     I  think  that  they  will  go  far. 

The  other  installation  I  set  out  to  describe  is 
also  in  the  experimental  stage,  and  therefore 
also  gives  a  splendid  opportunity  for  the  full 
play  of  ideas.  It  is  as  different  as  possible 
from  the  machine-shop,  and  serves  to  illustrate 
how  perfectly  illogical  it  is  to  imagine  that  one 
kind  of  system  will  do  for  any  set  of  facts. 

This  company,  which  is  of  fair  size,  manuf ac- 


216     When  the  Workmen  Help  You  Manage 

tures  paints  and  varnishes.  Its  trade  is  sea- 
sonal, and  it  has  many  salesmen  and  thousands 
of  small  accounts.  Good  paint  is  good  paint. 
One  good  variety  differs  so  little  in  actual  merit 
from  another  that  it  is  the  sales  organization, 
and  not  the  factory,  that  makes  for  success. 
Unless  the  selling  (which  includes  the  advertis- 
ing) is  of  the  best,  the  factory  product  will  not 
be  disposed  of. 

The  quality  of  the  paint  is  naturally  affected 
by  the  character  of  the  mixing;  but  carelessness 
does  not  so  often  take  the  form  of  making  an 
inferior  paint  as  of  using  too  much  of  an  expen- 
sive material.  In  good  planning  the  quantities 
to  be  used  should  not  be  left  to  the  mixer,  but 
should  be  arranged  in  advance  by  the  chemists 
or  the  store-room.  In  the  making  of  paint  it  is 
the  material  and  not  the  labor  cost  that  is  of  the 
highest  importance. 

The  individual  effort  is  so  slight  that  it  is  not 
worth  while  to  work  out  individual  incentives, 
as  in  the  machine-shop.  Instead,  my  engineers 
have  arranged  a  collective  departmental  bonus 
based  upon  the  standard  of  production,  and  an 
additional  bonus  based  upon  the  economy  of 
operation.  The  first  bonus  is  too  complicated 
to  be  detailed  here,  because  the  standards  are 
very  numerous  and  take  into  consideration  the 


Balance  Betweeri  Capital  and  Labor     217 

size  of  the  orders  going  througli,  the  kinds  of 
containers,  the  recoloring,  and  a  number  of 
quasi-technical  and  technical  points.  The 
workers  themselves  have  proved  of  great  help 
in  the  setting  of  these  standards,  for  they  have 
brought  to  the  task  their  peculiarly  expert 
knowledge. 

A  part  of  the  departmental  bonus  is  paid  to 
the  administrative  divisions,  just  as  in  the  case 
of  the  machine-shop,  and  is  distributed  in  the 
same  manner.  In  the  machine-shop  we  have 
not  the  problem  of  seasonal  production,  but 
in  the  paint  plant  the  production  is  wholly  sea- 
sonal and  the  cost  of  the  material  is  so  great 
that  the  interest  upon  stored  goods  amounts  to 
a  considerable  item.  This  concern  is  now  stor- 
ing goods  (having  adopted  the  principle  that 
twelve  months'  work  must  be  given  to  the  men), 
but  only  time  will  demonstrate  whether  this  is 
the  best  way.  It  may  be  found  cheaper  to  pay 
the  men  for  doing  very  little  during  a  period  in 
which  they  will  not  receive  a  bonus — for  the 
production  will  be  below  the  standard.  They 
would,  however,  get  an  extra  bonus  in  the  busy 
seasons,  and  thus  their  year-round  wages  would 
be  satisfactory.  At  no  part  of  the  year  would 
they  be  without  at  least  a  living  wage. 

Since  I  am  presenting  a  going  experiment  and 


218     When  the  Workmen  Help  You  Manage 

not  a  finished  thing,  I  am  frank  to  say  that  on 
this  point  my  mind  is  open.  The  workers  them- 
selves and  the  sales  department,  acting  together, 
will  probably  solve  the  problem. 

Where  and  how  does  the  sales  force  fit  into 
the  scheme  ?  This  will  be  developed  in  the  next 
chapter. 


CHAPTER  XI 

THE    SYSTEM    OF    REPRESENTATION 

The  exact  position  of  the  salesman  in  the  in- 
dustrial relation  is  anomalons.  Until  recently 
far  too  much  stress  was  laid  upon  selling,  and  in 
some  specialties  the  selling  expense  was  out  of 
all  reason.  The  motor-car  industrj^  at  first  got 
into  the  hands  of  salesmen,  and  the  market  was 
flooded  with  cars  that  were  made  to  sell  and  not 
to  run. 

The  former  tendency  to  over-reward  sales- 
men and  to  neglect  factory  people  is  now  chang- 
ing into  a  tendency  to  neglect  salesmen  and 
pamper  the  workers.  It  is  far  easier  to-day  to 
hire  a  good  salesman  than  to  hire  a  first-class 
mechanic.  Then,  too,  salesmen  have  no  organ- 
izations ;  they  do  not  strike,  and  they  will  often 
stand  an  amount  of  abuse  from  a  sales  manager 
which,  if  duplicated  in  the  shop,  would  result  in 
a  general  walkout. 

The  real  reason  for  the  neglect  of  the  sales- 
man is  that  he  became  an  economic  absurdity. 
Trade  was  getting  to  the  point  where  sales  man- 

219 


220     When  the  Workmen  Help  You  Manage 

agers  and  advertising  agents  would  state  in  all 
seriousness  that  the  entirety  of  business  was 
selling,  and  that,  given  a  sufficient  appropria- 
tion and  enough  ''pep,"  anything  might  be  "put 
over. "  We  now  know  that  there  must  be  a  mu- 
tuality in  any  trade  if  it  is  to  be  continuously 
worth  while — that  the  article  has  satisfactorily 
to  meet  a  need  or  a  desire.  Hence  the  salesman 
does  not  have  to  "put  over"  anything,  but  is 
merely  a  medium  for  bringing  the  producer  and 
the  consumer  together.  Making  something  ' '  to 
sell"  bears  the  same  relation  to  real  industry 
that  fake  oil  stock  selling  does  to  legitimate 
finance. 

Our  present  scheme  of  distribution  is  very 
faulty.  There  is  no  reason  why  an  article 
should  double  in  price  between  the  factory  and 
the  ultimate  consumer — as  the  average  article 
does.  Therefore,  though  the  position  of  the 
salesman  is  not  a  settled  one,  in  the  present 
scheme  of  industry  he  has  a  place,  and  a  place 
of  great  value. 

The  line  between  selling  and  manufacturing 
is  not  draAvn  taut.  For  example,  the  air-tight 
package  for  biscuits  is  both  a  selling  and  a  man- 
ufacturing proposition,  and  so  is  the  sealed  con- 
tainer for  ready-to-use  handkerchiefs.  In 
paint  the  consumer  at  retail  will  probably  buy 


The  System  of  Representation       221 

the  best  advertised  and  most  conveniently 
packed  article.  On  the  other  hand,  the  pur- 
chase of  a  milling-machine  will  be  governed  by 
performance  rather  than  by  appearance. 

The  true  duty  of  the  salesmen  (and  advertis- 
ing is  only  the  salesman  with  his  talk  in  print) 
is  to  distribute  the  factory  product  to  the  best 
advantage,  by  presenting  the  good  points  to  the 
largest  number  of  people,  and  to  advise  the  fac- 
tory if  the  product  is  not  meeting  needs  or 
desires.  As  a  link  between  the  producer  and 
the  consumer  the  salesman  is  essential  in  in- 
dustry. 

The  sales  force  is  not  a  thing  apart  and  quite 
unconnected  with  the  factory.  The  two  are 
supplementary,  although,  as  I  pointed  out  in  the 
preceding  article,  one  may  be  vastly  more  im- 
portant than  the  other.  Their  cooperation  is 
essential.  Delayed  deliveries  and  defective 
goods  will  undo  the  work  of  the  best  salesman, 
while  poor  selling  will  leave  the  factory  with 
no  orders  to  fill.  Again,  the  salesmen  may 
oversell  the  factory,  and,  although  this  condi- 
tion may  be  one  of  pride  to  the  sales  manager, 
it  is  disastrous  to  the  company,  for  the  conse- 
quent delays  will  make  subsequent  selling  very 
much  harder. 

I  know  of  a  president  who  desired  to  gain  con- 


222     When  the  Workmen  Help  You  Manage 

trol  of  his  company.  The  opposing  forces  were 
centered  in  the  vice-president,  who  was  in 
charge  of  production.  The  president,  who  was 
a  marvelous  salestman,  deliberately  oversold  the 
factory  to  such  an  extent  as  to  enable  him  daily 
to  protest  to  the  vice-president  that  the  com- 
pany could  not  go  on  unless  the  productive  de- 
partments became  more  efficient.  Eventually 
he  so  harried  the  vice-president  that  he  sold  his 
stock  and  resigned.  Then  the  president  read- 
justed the  balance  between  sales  and  production. 

In  progressive  companies  the  production  peo- 
ple are  nearly  always  present  at  sales  conven- 
tions. That  the  sales  and  productive  divisions 
must  cooperate  is  now  a  recognized  principle  of 
good  business ;  but  it  is  not  generally  recognized 
that  the  best  cooperation  is  to  be  had  by  the 
organization  of  the  salesmen  on  the  plan  of  rep- 
resentation, on  the  same  lines  as  the  shop  com- 
mittees, and  having  the  sales  committees  with  a 
further  representation  upon  the  general  repre- 
sentative bodies,  which  may  be  created  in  the 
evolution  of  shop  autonomy. 

The  sales  manager  who  declares  that  the  sales 
force  is  the  whole  thing  in  the  business  is  often 
the  man  who  is  the  readiest  to  discharge  a  sales- 
man ;  and  there  is  a  race  of  sales  managers  who 
pride  themselves  upon  not  keeping  ''dead  ones" 


The  System  of  Representation        223 

— a  'Mead  one"  being  a  man  who  does  not  turn 
in  all  the  orders  he  should.  In  the  case  of  the 
factory  we  have  seen  that  slovenly  work  is  usu- 
ally the  result  of  bad  management — that  the 
average  worker,  given  a  proper  financial  incen- 
tive and  a  proper  pride  in  his  work,  is  a  good 
worker.  By  the  same  token,  the  average  sales- 
man, if  given  the  right  incentive  and  pride  in  his 
work,  will  be  a  good  salesman — perhaps  not  a 
star,  but  sufficiently  capable  to  create  a  valuable 
good  will  for  the  company. 

How,  then,  are  the  salesmen  to  be  brought  into 
the  general  scheme  of  remuneration  and  govern- 
ment, as  described  in  the  preceding  article  in  the 
case  of  the  machine-shop  and  the  paint  factory? 
Since  the  machine-shop  example  was  taken  be- 
cause it  presented  so  many  production  features 
in  strong  relief,  and  not  at  all  for  its  selling 
side,  it  need  not  be  further  regarded.  But  the 
paint  company  depended  largely  upon  selling. 
Its  sales  problems  were  immense,  and  it  oper- 
ated against  many  strong  competitors  of  na- 
tional reputation.  All  paint  manufacturers 
have,  in  addition,  keen  local  competition — for  it 
does  not  take  much  capital  to  mix  paint  or  var- 
nish. 

The  company  sold  paint  and  varnish  in  many 
forms  and  to  many  different  kinds  of  custom- 


224     When  the  Workmen  Help  You  Manage 

ers;  it  sold  in  small  containers  for  the  retail 
trade  and  in  bulk  to  contractors  and  industrial 
plants.  The  method  of  packing  has  a  consider- 
able influence  upon  the  price,  and  the  fluctua- 
tions of  the  price  of  raw  materials  makes  the 
price  of  the  finished  product  vary  almost  from 
day  to  day.  In  large  sales  the  price  does  vary 
from  day  to  day,  and,  in  making  contracts  over 
long  periods  the  company  had  to  calculate 
against  the  loss  of  a  rising  market — just  as  does 
the  manufacturer  of  cotton,  belting,  or  any 
product  that  contains  so  great  a  proportion  of 
raw  material  as  to  make  it  responsive  to  the 
commodity  market.  Again,  varnishes  are  more 
profitable  than  paints. 

With  all  these  facts  in  mind,  the  payment  of 
the  salesman  upon  any  commission  basis  calcu- 
lated on  the  precise  profit  of  the  particular  sale 
was  out  of  the  question.  The  bookkeeping  of 
any  such  system  would  be  enormous,  and  the 
agent's  end  would  not  be  satisfactory,  because 
his  profits  would  fluctuate.  The  principle  that 
the  reward  should  be  for  effort  holds  here.  The 
risks  are  those  of  capital  and  not  of  labor — for 
the  salesman  is  a  laborer,  even  if  he  does  wear  a 
white  collar.  A  straight  commission  or  a  bonus 
upon  the  dollar  amount  of  sales  would  be  wholly 
unscientific.     The  worker  is  paid  upon  the  de- 


The  System  of  Representation       225 

creases  that  he  makes  in  the  cost  of  production, 
or,  to  put  it  in  another  way,  in  the  opportunities 
that  he  creates  for  j^rofit.  The  salesman  is  to 
be  paid  upon  the  profit  that  the  company  makes 
upon  his  sales. 

The  gross  dollar  does  not  represent  profit. 
A  line  that  is  very  easy  to  sell  may  and  probably 
will  bring  a  small  profit,  while  another  line  will 
carry  a  large  profit.  The  company  may  even 
have  leaders,  which  it  sells  at  little  or  no  profit 
just  as  "business-getters";  those  will  be  ex- 
ceedingly easy  to  sell  and,  upon  a  gross  percent- 
age, they  will  be  the  grades  sold  by  the  man  on 
the  road,  for  they  represent  to  him  the  largest 
return  for  the  least  expenditure  of  effort,  and 
in  this  make  his  best  interest  opposed  to  the 
best  interest  of  the  company.  The  right  way  is 
to  make  the  interests  identical,  and  in  the  paint 
company  this  was  done  by  a  point  system. 

For  instance,  a  varnish  on  which  the  company 
profit  was  twenty  per  cent,  carried  eight  points, 
while  a  paint  with  a  twenty-five  per  cent,  profit 
carried  only  two  points.  In  all,  twenty  classes 
were  thus  formed.  Instead,  then,  of  posting  the 
sales  records  merely  in  dollars,  they  were  also 
posted  in  points,  and  the  salesmen  were  paid  on 
point  values.  Beyond  a  certain  number  of 
points  the  company  could  well  afford,  as  in  the 


226     When  the  Workmen  Help  You  Manage 

case  of  the  worker  going  above  the  standard,  to 
pay  a  bonus.  This,  in  turn,  becomes  something 
in  the  nature  of  a  sales  quota. 

It  would  be  obviously  unfair  to  put  the  same 
bonus  point  in  all  territories ;  for  a  poor  sales- 
man in  a  thickly  populated  section  would  have 
no  trouble  in  selling  always  above  the  quota, 
while  a  good  salesman  in  a  sparsely  settled  ter- 
ritory would  hardly  ever  be  able  to  attain  the 
quota.  In  fact,  the  second  territory  might  have 
been  entered  with  the  expectation  of  a  loss  for 
several  years.  We  therefore  set  reasonably 
high,  but  attainable,  standards  for  the  good  ter- 
ritories, and  give  lower  figures  to  the  less  de- 
veloped sections,  with  the  understanding  that 
the  lower  standards  are  to  be  raised  as  those 
territories  become  better  sold.  We  try  to  in- 
sure that  effort  and  not  luck  will  determine  the 
individual  sales  incomes. 

The  value  of  points  and  the  fixing  of  stand- 
ards are  quite  as  fertile  a  field  for  dissatisfac- 
tion as  the  settling  of  factory  job  rates  and 
standards,  and  here  it  is  that  representation 
plays  its  great  part.  Instead  of  the  sales  man- 
ager fixing  the  values  and  standards  at  his  own 
discretion,  the  initial  values  are  set  subject  to 
revie¥7  by  an  elected  committee.  A  further 
committee  had  been  elected  to  adjust  all  disputes 


The  System  of  Representation       227 

other  than  those  concerning  rates,  and  other 
ooinmittees  will  doubtless  form  as  the  needs 
arise.  The  plan  is,  not  to  force  committees,  but 
to  let  them  grow  out  of  specific  situations. 
Eventually  the  sales-people  will  elect  represent- 
atives to  a  general  legislative  body,  which  will 
come  into  being  as  the  representative  plan 
grows. 

In  the  sales  department  the  men  on  the  road 
may  be  considered  as  the  productive  labor,  and 
the  office  people  as  the  unproductive.  It  is  the 
planning  and  backing  up  by  the  non-sellers  that 
helps  the  sellers  to  do  their  best,  and  these  non- 
sellers  should  also  have  a  reward  analogous  to 
that  shared  in  by  the  factory  administration. 
HencG  it  is  planned  to  pay  them  a  bonus  based 
on  a  percentage  of  the  bonus  earned  by  the  ac- 
tive salesmen,  and  thus  the  interests  of  the 
office  and  of  the  sales  force  are  made  identical. 
Often  a  lack  of  harmony  exists  between  these 
two  branches;  but  having  a  common  object 
measured  in  money  tends  to  promote  harmony. 

I  have  condemned  profit-sharing  except 
among  those  who  so  managed  the  capital  as  to 
make  profits  or  whose  mismanagement  pre- 
vented profits — that  is,  the  president  and  other 
high  executive  officers  who  have  no  direct  con- 
nection with  any  department,  but  upon  whose 


228     When  the  Workmen  Help  You  Manage 

policy  the  increment  to  capital  depends.  These 
men  should  share  in  the  profits  of  the  company 
as  such.  In  both  the  machine  and  the  paint 
companies  the  same  plans  are  being  carried  out. 

In  each  case  seven  per  cent,  of  the  net  profits 
are  set  aside  for  the  stockholders,  and  then  a 
percentage  taken  for  the  executive  officers  and 
their  personal  staffs.  This  percentage  is  not 
fixed,  but  depends  upon  the  expected  earnings 
of  the  company,  just  as  does  the  dividend  on 
the  common  stock.  The  men  higher  up  know 
the  why  and  how  of  profits,  and  are  in  a  very 
different  case  from  the  workers  or  salesmen; 
they  are  the  actual  managers  of  capital.  I  do 
not  favor  a  fixed  percentage  of  profit  for  each 
individual — say  fifteen  per  cent,  for  the  presi- 
dent, ten  per  cent,  for  the  vice-president,  and  so 
on;  for  executives  are  to  be  rewarded,  not  for 
the  work  they  do,  but  for  the  success  that  they 
achieve,  and,  no  matter  what  work  they  have 
done,  they  are  not  entitled  to  an  addition  to 
salary  unless  they  have  made  money  for  the 
company.  They  are  in  quite  the  same  position 
as  capital  itself. 

Further,  the  individual  percentage  system 
causes  an  additional  cut  into  capital's  profit, 
with  the  addition  of  every  new  executive.  The 
incentive  should  be  to  keep  down  rather  than 


The  System  of  Representation       229 

to  increase  the  administration  expense,  and,  if 
the  percentage  is  taken  as  a  whole  and  then  ap- 
portioned according  to  salary,  the  executive  ef- 
fort will  be  toward  keeping  down  the  number  of 
people  who  must  share  in  the  executive  profit — 
incidentally  keeping  down  overhead.  A  new 
man  will  not  be  taken  on  unless  it  is  pretty  cer- 
tain that  he  will  add  enough  to  the  company 
profit  to  cover  the  share  that  he  will  receive 
from  the  joint  fund.  There  is  small  danger 
that  the  executives  will  try  to  get  along  with 
too  little  assistance. 

T  have  outlined  two  specific  plans  that  are  in 
operation,  and  that  are,  to  date,  entirely  success- 
ful. Both  companies  are  without  labor  trouble 
and  have  gained  in  production  and  in  profit. 
All  of  the  members  of  both  companies  are  mak- 
ing more  money  than  they  ever  did  before  and 
more  than  other  people  in  similar  positions. 

''But,"  some  one  will  object,  "these  are  but 
experiments.  It  is  my  policy  never  to  experi- 
ment. I  leave  that  to  the  other  fellow,  and  then 
cash  in  on  his  mistakes." 

I  know  that  type  of  intellect  very  well.  Not 
long  since  I  had  the  general  manager  of  a  com- 
pany say  to  me  with  conscious  pride : 

"I  am  sixty  years  old,  and  it  has  been  my  rule 
never  to  accept  a  theory.     I  never  deal  with 


230     When  the  Workmen  Help  You  Manage 

anything  but  facts.  I  have  never  tried  any- 
thing until  some  one  else  has  proved  it. ' ' 

I  am  sorry  that  I  had  to  make  the  answer 
which  I  did,  because  it  hurt,  and  it  is  not  nice  to 
hurt  an  old  man.  I  simply  had  to  state  the 
truth.     I  said : 

**Is  not  that  the  reason  that  your  company 
has  been  slipping  back  for  the  last  ten  years'?" 

At  the  present  time  all  of  us  who  are  in  indus- 
try are  trying  experiments  of  one  kind  or  an- 
other. The  most  dangerous  experiment  is  to 
wait  around  until  ''things  settle  down." 

The  mind  that  insists  upon  all  facts  and  no 
theories  is  out  of  place  in  the  industrial  world. 
Certain  fish  of  positive  and  non-theoretical  na- 
tures may  be  caught  in  cornucopia-shaped  nets. 
They  will  enter  the  seeming  horn  of  plenty,  and, 
having  a  fixed  purpose,  will  not  permit  the 
slight  impediment  of  the  net  to  alter  a  pre- 
ordained course.  They  bump  and  bite  at  the 
strands  in  regular  "he-man"  fashion.  It  never 
occurs  to  them  to  go  back  and  go  around.  In- 
dustry holds  plenty  of  people  with  these  fishlike 
perspectives. 

Or,  again,  some  one  may  object:  ''This  is 
only  efficiency  engineering  dressed  up  a  little." 

It  is  "efficiency  engineering"  in  the  right 
sense,  but  not  in  the  common  acceptance  of  the 


The  System  of  Representation       231 

term.  I  share  the  feeling  that  an  ''efficiency 
engineer"  is  a  dangerous  person,  and  I  have 
seen  the  ruins  of  their  work  in  many  sections. 
The  useless  card  records  and  filing  systems  that 
encumber  offices  throughout  the  country  would, 
if  sold,  go  quite  far  toward  paying  the  war  debt. 

Eeal  engineering  efficiency  is  something  dif- 
ferent. It  is  to  be  had  in  ways  many  of  which 
are  so  simple  as  to  suggest  the  "I  never  thought 
of  that"  cartoons. 

For  instance,  in  a  certain  preserving  factory 
the  women  were  taking  the  ''eyes"  out  of  pine- 
apples with  the  same  eight-inch  knives  that  they 
used  for  the  paring — and  the  executives  won- 
dered why  the  process  was  so  slow  and  costly. 
A  short  knife  for  the  digging  work  was  all  that 
was  needed. 

The  engineering  department  of  a  works  speci- 
fied that  thrust  collars  were  to  be  made  of  ma- 
chinery steel.  These  collars  came  through  in 
lots  of  five  hundred  and  sixty,  and  they  cost 
$2,247.20  for  material  and  fabrication — the  ma- 
chining was  a  costly  process.  The  suggestion 
that  castings  be  tried  out  started  a  series  of 
experiments,  which  demonstrated  that  the  cast- 
ings had  all  the  necessary  strength.  A  lot  made 
from  castings  costs  but  $1,433.60 — clear  saving, 
which  it  does  not  take  an  accountant  to  estimate. 


232     When  the  Workmen  Help  You  Manage 

Another  machine-shop  employed  twenty-two 
men  and  a  foreman  in  the  janitor  force.  These 
men  were  supposed  to  keep  the  place  clean,  but 
they  did  not.  They  roved  about  the  factory, 
sweeping  whenever  some  foreman  complained 
about  the  condition  of  his  floor. 

Our  engineers  divided  the  factory  into  areas, 
and  made  a  study  of  the  time  it  should  take  to 
sweep  each  area — some  required  more  and 
others  less  cleaning.  Then  the  areas  were  ap- 
portioned to  the  actual  labor  involved,  and  the 
men  in  charge  were  made  responsible.  If  their 
work  was  pronounced  good  by  the  foremen,  they 
received  a  bonus  of  ten  per  cent.  The  men,  hav- 
ing an  incentive,  used  their  heads  as  well  as 
their  brooms  and  brushes.  Instead  of  twenty- 
two  men,  ten  are  now  doing  the  work,  and,  al- 
though they  earn  a  bonus  of  one  hundred  and 
thirty  dollars  a  month,  the  cleaning  service  costs 
exactly  $1,072.50  per  month  less  than  formerly. 

Eeal  industrial  engineering  is  not  made  up 
of  forms  and  records ;  it  is  made  up  of  experi- 
ence and  the  application  of  that  experience  in  a 
common-sense  way.  The  savings  may  or  may 
not  be  spectacular,  but  the  method  seldom  is. 

Do  not  let  us  get  away  from  the  thesis.  We 
are  trying  to  find  a  way  to  live  under  the  wage 
system — to  find  the  right  balance  between  the 


The  System  of  Representation       233 

wages  of  capital  and  wages  of  labor.  If  we 
throw  away  any  part  of  capital  or  any  part  of 
labor,  it  must  come  off  the  wages  of  one  or  the 
other. 

I  found  a  plant  which  had  wholly  unnecessary 
tools  to  the  value  of  $13,200,  and  the  works  man- 
ager was  really  somewhat  miffed  at  having  the 
condition  called  to  his  attention.  But  suppose 
that  same  manager  had  hired  a  youth  to  drop 
out  of  the  window  a  ten-cent  piece  every  minute? 
He  could  have  given  steady  work  to  the  young 
man  for  about  nine  months,  on  an  eight-hour 
schedule,  before  he  had  thrown  away  the  same 
amount  of  money  that  he  tossed  off  in  tool 
steel. 

Had  that  works  manager  chosen  the  window 
way  of  getting  rid  of  money,  he  would  have  been 
caged  as  a  lunatic.  Why  should  the  business 
control  have  been  so  loose  as  to  permit  him  to 
waste  the  money  in  less  obvious  fashion?  If  we 
waste  money  we  can  not  have  enough  profit 
from  industrial  operations,  and  hence  either 
capital  or  labor  is  bound  to  be  dissatisfied — 
for,  somehow,  the  notion  always  obtains  that,  if 
enough  money  is  not  being  made,  it  is  because 
the  capital  charges  or  the  wages  are  too  high. 

Industrial  unrest  finds  its  greatest  cause  in  a 
dissatisfaction  with  the  distribution  of  the  pro- 


234     When  the  Workmen  Help  You  Manage 

ceeds  of  industry,  and  it  is  not  possible  to  ar- 
range a  satisfactory  apportionment  unless  the 
proceeds  are  reasonably  adequate.  The  waste- 
ful business  is  always  the  low-wage  business. 
Larger  sums  to  distribute  can  not  come  from 
higher  prices  to  the  consumer :  they  must  come 
from  better  business  methods.  And  no  possible 
way  can  be  found  to  adjust  the  claims  of  labor, 
unless  the  funds  for  its  payment  arise  from  sci- 
entific business  conduct. 

The  introduction  and  maintenance  of  scien- 
tific methods  is  peculiarly  the  task  of  capital, 
but  they  have  often  failed  in  the  past  because 
they  have  been  solely  for  the  benefit  of  capital. 
Greater  skill  in  the  worker  has  not  always 
meant  higher  wages  for  him. 

Why?  Simply  because  he  has  had  no  part  in 
the  conduct  of  industry — in  the  conduct  of  that 
part  which  concerns  him.  Hence  the  tendency 
to  resist  better  methods.  Industrial  engineer- 
ing was  incomplete  in  that  it  did  not  sufficiently 
consider  the  human  factor.  (Of  course  I  ex- 
clude the  mere  ''system'^  installers.) 

It  is  to  be  conceded  that  we  must  have  lead- 
ers in  industry,  and  I  have  no  doubt  that,  if  all 
leadership  were  wise,  the  led  would  be  entirely 
satisfied.  Bolshevism  does  not  seek  to  abolish 
leadership.     In  the  German  industrial  order,  in- 


The  System  of  Representation       235 

finite  pains  were  taken  in  the  training  of  execu- 
tives, and  their  conduct  had  much  to  do  with  the 
sentiment  of  the  German  worker  generally  that 
he  '*was  getting  all  that  was  coming  to  him." 
The  worker  does  not  feel  that  way  here  or  in 
England,  because  so  little  attention  has  been 
paid  to  training  executives  that  they  are  not  al- 
ways efficient  leaders.  Our  executives  usually 
either  work  their  way  up,  or  are  dropped  in 
from  the  top,  and  in  neither  case  is  any  special 
attention  given  to  the  mental  outlook  that  the 
position  demands.  Therefore  exact  cost  ac- 
counting is  far  from  being  usual,  the  broader 
views  of  costs  are  infrequent,  and  much  rule-of- 
thumb  direction  and  regulation  goes  on.  Arbi- 
trariness is  the  companion  of  ignorance,  and  not 
infrequently  arbitrariness  will  seek  to  curry 
favor  here  and  there  by  playing  favorites.  No 
matter  how  conscientious  may  be  the  men  at  the 
very  top,  it  is  the  men  who  come  into  contact 
with  the  workers  who  determine  the  spirit  of 
the  place. 

The  petty  rules  that  are  made  seemingly  only 
for  the  sake  of  making  rules,  the  angry  firings 
(often  to  cover  up  the  work  of  the  foremen),  and 
the  haphazard  setting  of  piece  rates,  all  con- 
tribute to  create  in  the  worker  an  attitude  ad- 
verse to  the  emploj^er.    Take,  for  instance,  this 


286     When  the  Workmen  Help  You  Manage 

experience  with  piece  rates  that  was  had  by  a 
meraber  of  my  organization  who  once  worked 
in  a  machine-shop : 

'^  There  was  the  matter  of  piece-work  rates. 
Wlien  a  new  job  came  along,  the  foreman  tried 
out  a  few  pieces,  and  based  the  rate  upon  what 
he  considered  a  fair  working  speed.  If  the  rate 
was  high,  we  planned  our  etfort  to  stretch  the 
job.  If  we  didn't,  the  rate  would  be  cut.  If 
the  rate  was  low,  we  raised  a  howl,  and  gener- 
ally got  our  increase.  It  was  ''heads  I  win; 
tails  you  lose."    The  company  always  lost. 

"My  rate  was  twenty-seven  and  one  half 
cents  an  hour.  This  was  several  years  ago,  and 
admittedly  I  make  no  claim  to  have  been  the 
best  machinist.  I  was  very  young,  and,  despite 
my  rapidly  increasing  technical  education,  I 
was  'green'  in  practice.  Yet  on  many  jobs  I 
was  able  to  make  forty  cents  an  hour  consist- 
ently and  still  did  a  satisfactory  job.  As  a  rule, 
I  worked  up  a  'lead'  of  from  one  to  three  dol- 
lars, which  meant  that  toward  the  end  of  the 
week,  if  I  did  not  feel  energetic,  I  could  appear 
busy  and  eat  up  the  lead.  When  the  lead  was 
gone,  it  was  comparatively  simple  to  work  up 
another.  I  recall  one  of  my  neighbors  who  at 
one  time  worked  up  a  lead  of  fifteen  dollars  by 
prodigious  enterprise.     Immediately  thereafter 


The  System  of  Representation       237 

several  rates   were   cut  throughout  the   shop. 

''Sometimes  I  tried  to  turn  in  two  dollars  and 
eighty-five  cents  or  tw^o  dollars  and  ninety  cents 
as  a  day's  wage,  but  the  job  foreman  would 
warn  me  that,  if  I  did,  the  rate  would  be  cut. 

''Throughout  that  immense  plant — though, 
of  course,  to  a  varying  degree  in  different  de- 
partments— production  was  throttled.  Yet,  as 
I  have  said,  that  plant  is  the  presumed  leader  in 
its  industry. 

"Since  that  period  of  servitude,  I  have  taken 
many  rates  in  many  different  shops,  and  have 
arriyed  at  several  conclusions,  principal  among 
which  is  that  the  average  factory  head  does  not 
know  whether  his  rates  are  equitable  or  not,  and 
has  not  the  means  easily  to  find  out;  that  he 
relies  too  much  upon  his  foremen's  knowledge, 
which  is  often  superficial ;  and  that,  in  nine  cases 
out  of  ten,  the  company  is  the  sufferer — not  be- 
cause the  men  are  unwilling  to  work  hard  and 
earnestly,  but  because  their  production  is  stifled 
by  the  knowledge  that  the  rates  are  and  will 
continue  to  be  inequitable." 

That  experience  is  characteristic.  Although 
scientific  engineering  may  fix  right  rates,  it  can 
not  alone  convince  the  workers  that  those  rates 
are  right.  The  unjust  practices  are  of  too  long 
standing  for  the  men  to  take  anything  on  faith 


238     When  the  Workmen  Help  You  Manage 

in  almost  any  department  of  manufacturing. 
Scientific  industrial  engineering  came  into  the 
shop  from  the  top,  and  was  resisted.  It  can  as 
well  come  up  from  the  bottom — that  is,  by 
means  of  the  representative  plan  that  I  have 
sketched  in  various  places,  but  on  which  I  have 
never  been  entirel}"  specific,  for  the  reason  that 
the  legislative  system  should  be  no  more  com- 
plicated than  the  situation  needs.  The  flexible 
English  Constitution,  and  not  the  rigid  Ameri- 
can one,  is  what  the  shop  needs. 

No  representative  system  will  be  wholly  suc- 
cessful at  first;  the  men  will  not  welcome  it. 
What  they  will  do  is  to  keep  a  sharp  lookout  for 
"stool  pigeons,"  and  then  cannily  watch  the 
working.  The  experience  of  General  Disque 
with  the  lumbermen  of  the  Northwest  is  illumi- 
nating in  this  connection. 

General  Disque  was  charged  by  the  War  De- 
partment to  increase  the  production  of  lumber 
for  airplanes  to  about  twenty-five  hundred  per 
cent.  He  found  the  employers  and  the  laboring 
people  at  swords*  points.  The  two  had  fought 
for  years,  and  both  had  taken  the  occasion  of  the 
war  to  profiteer — the  one  in  prices  and  the  other 
in  wages.  A  strong  anarchistic  and  I.  W.  W. 
element  existed,  and  sabotage  was  frequent. 
When  the  general  proposed  that  the  workers 


The  System  of  Representation       239 

elect  representatives  to  a  meeting  with  the  em- 
ployers, and  that  this  meeting  settle  all  disputes, 
the  men  were  skeptical.  If  General  Disque  had 
not  previously  gained  the  confidence  of  his  men, 
they  would  probably  have  refused.  But  they 
consented  to  elect  delegates,  and  they  selected 
the  men  who  had  positive  ideas  on  these  points : 

(1)  A  fixed  determination  to  discover  at  the 
outset  whether  there  was  any  '* nigger  in  the 
woodpile" — whether  the  operators  were  trying 
to  put  something  over. 

(2)  That  they  were  not  free  agents,  but  rep- 
resentatives, and  solely  responsible  to  their  con- 
stituents, with  whom  they  would  frequently  con- 
sult. 

(3)  That  a  full  year's  work  must  be  assured, 
and  that  improvements  in  the  industry  must  be 
made  in  order  to  attain  this  steady  employment. 

It  took  six  months  to  establish  the  fairness  of 
the  intentions  in  the  minds  of  the  delegates,  and 
the  most  convincing  argument  proved  to  be  the 
insistence  by  General  Disque  that  the  operators 
have  exact  cost  systems  installed,  and  that  all 
the  figures  be  open  to  the  delegates.  The  exhi- 
bition of  the  cost  sheets  contradicted  the  asser- 
tions of  the  agitators  that  the  operators  were 
making  fabulous  sums. 


240     When  the  Workmen  Help  You  Manage 

Another  man  of  wide  experience  in  industrial 
matters  has  never  found  it  necessary  to  exhibit 
cost  sheets,  for  the  reason  that  he  gives :  ' '  The 
men,  once  they  are  convinced  that  you  are  play- 
ing fair,  have  no  interest  in  what  you  make — if 
they  are  making  all  that  they  think  they 
should. ' ' 

My  own  experience  is  that  cost  sheets  are 
rarely  asked  for ;  but  my  advice  is  that  the  cost 
records  should  be  exact,  and  that  they  should  be 
exhibited  if  a  demand  is  made.  It  is  my  belief 
that  before  long  the  submitting  of  accounts  to 
the  employees  will  be  a  matter  of  course,  and 
that  it  will  then  be  a  great  stimulus  to  better 
and  more  economical  work.  The  creative  in- 
stinct is  not  fully  satisfied  until  it  knows  all 
about  what  it  is  creating,  and,  human-like,  if 
any  one  avenue  of  information  is  denied,  that 
and  that  alone  is  desired.  In  the  full  fairness 
of  purpose,  an  employer  will  not  care  to  with- 
hold any  information  that  his  employees  desire ; 
but,  at  the  same  time,  caution  is  to  be  used  in 
bringing  up  matters  before  the  employees  them- 
selves are  ready  to  comprehend  them,  or  before 
the  machinery  of  self-rule  is  in  full  working 
order. 

It  is  not  because  I  am  afraid  of  the  actions  of 
the  employees  that  I  do  not  favor  an  immediate 


The  System  of  Representation       241 

sMft  to  committee  government,  but  merely  be- 
cause large  management  changes  are  always 
provocative  of  waste,  and  what  we  are  after  is 
the  avoidance  of  waste. 

In  serious  situations,  undoubtedly  the  full 
measure  should  be  given  at  once,  for  then  there 
is  nothing  to  disturb — the  disturbance  has  al- 
ready taken  place.  There  are  few  strikes  that 
can  not  be  settled  by  the  full  exhibition  of  facts 
and  an  offer  to  work  out  a  satisfactory  basis 
together — provided  the  worker's  own  investiga- 
tion of  the  offer  proves  to  him  i1;s  good  faith,  as 
in  the  case  of  General  Disque  and  the  lumber- 
men. 

The  exact  machinery  of  government  should 
be  whatever  suits  the  circumstances — the  sim- 
pler always  being  preferred  to  the  more  com- 
plicated. The  chairmen  of  the  various  shop 
committees  may  constitute  the  central  body,  or 
that  body  may  be  elected  directly  from  the  de- 
partments. In  no  case,  however,  should  the  em- 
ployer have  any  part  in  the  election  of  repre- 
sentatives, and  neither  should  cognizance  be 
taken  of  any  debates  held  in  the  committees  or 
assemblies — the  right  of  free  speech  is  to  be 
held  sacred. 

It  is  advisable  also  that  in  the  workers'  as- 
sembly there  should  be  no  foremen  or  superin- 


242     When  the  Workmen  Help  You  Manage 

tendents,  or  other  higher  authorities,  who  might 
tend  to  curb  or  to  punish  the  free  expression  of 
opinion.  But,  since  the  foremen  and  superin- 
tendents have  rights,  they  too  ought  to  have  a 
committee  or  assembly,  which  can  act  concur- 
rently with  the  workers'  meetings. 

Over  all  the  executives  should,  for  the  pres- 
ent, retain  the  right  of  veto.  But  I  have  never 
known  an  executive  who  found  it  necessary  to 
exercise  the  veto !  Out  of  some  hundreds  of 
cases  of  quasi-democratic  shop  government,  I 
have  yet  to  find  a  radical  measure  that  passed. 

The  supervision  of  foremen  is  one  of  the 
hardest  parts  of  industry.  A  few  foremen  are 
intentionally  unjust;  a  considerable  number 
have  gained  their  places  by  "pull"  and  are  in- 
competent. What  is  to  be  done  with  them!  It 
is  not  right  that  a  departmental  foreman  should 
be  brought  to  trial  before  a  committee  of  his 
own  department,  for  that  inevitably  means  wire- 
pulling and  politics.  The  better  method  is  to 
let  the  central  workers '  body  and  the  foremen 's 
meeting  appoint  a  joint  committee  to  investi- 
gate all  complaints  against  foremen;  that  joint 
body  should  have  the  power  to  recommend  dis- 
missal, and  the  two  parent  bodies  should  have 
the  power  to  dismiss — subject,  of  course,  to  the 
executive  veto. 


The  System  of  Representation       243 

These  several  legislative  bodies  and  numerous 
conunittees  open  up  a  legislative  side  of  indus- 
try with  which  the  average  organization  has  not 
officers  to  deal.  There  are  minutes  to  be  copied 
and  filed,  reports  and  bulletins  to  be  published, 
and  no  end  of  other  administrative  details  too 
great  for  any  of  the  working  members  and  for 
which  they  are  unlikely  to  have  the  training  and 
equipment.  For  this  purpose  an  industrial  re- 
lations secretary  is  advisable,  and  care  should 
be  taken  to  avoid  the  hand-shaking,  welfare- 
worker  type.  In  the  Filene  store  the  secretary 
is  elected  by  the  workers,  although  paid  by  the 
corporation.  Certainly  every  precaution  is  to 
be  taken  to  avoid  the  accusation  that  the  secre- 
tary is  a  spy  of  the  management. 

In  any  plan,  the  management  can  afford,  when 
any  point  of  organization  or  power  arises,  to 
give  rather  than  to  withhold,  and  to  avoid 
rather  than  to  make  rules.  If  workers  are 
merely  given  a  larger  cage,  they  will  be  almost 
always  pressing  at  the  bars ;  but  if  the  bars  are 
taken  away,  they  will  give  themselves  to  the 
work  in  hand.  It  is  a  saving  grace  of  human 
nature  that  responsibility  breeds  conservatism. 


CHAPTER  XII 

IN    CONCLUSION 

Having  wandered  somewhat  deviously  here 
and  there  among  the  mazes  of  that  which  we 
call,  for  want  of  a  better  phrase,  the  relation 
between  capital  and  labor,  what  have  we  found 
out? 

We  know  that  it  does  not  help  the  relation  to 
call  either  capital  or  labor  by  names  that  are 
softer  and  less  sheer;  that  capital  is  capital 
and  labor  is  labor;  that  wages  are  wages  and 
profits  are  profits.  The  relation  is  basically  a 
monetary  one,  and  is  social  only  in  the  same  way 
that  a  department-store  finds  it  good  business 
to  provide  chairs  for  the  visitors,  so  that,  in- 
stead of  going  home  when  tired,  they  may  rest  a 
while  and  then  buy  more.  I  can  not  too  bluntly, 
too  crudely,  too  brusquely  give  this  aspect  of  the 
relation. 

A  man  goes  into  business  to  make  money. 
He  hires  a  man  to  work  for  him  in  order  that  he, 
the  employer,  may  make  more  money,  while  the 
man  who  is  hired  takes  the  employment,  not 

244 


In  Concltision  245 

primarily  that  his  employer  may  make  more 
money,  but  that  he  may  make  money  himself. 
From  then  on  the  problem  becomes,  whether 
these  two  will  make  more  money  together  or 
apart.  They  may  decide  that  their  personal 
characteristics  are  so  endearing  as  to  be  worth 
more  than  money.  They  may  decide  that  their 
association  affords  mutual  educational  or  other 
cultural  advantages  not  to  be  valued  in  money. 
But  always  the  fundamental  monetary  relation 
remains — the  rest  is  only  embroidery. 

That  fundamental  relation  must  remain  if  the 
capitalistic  system  is  to  endure. 

I  prefer  to  use  the  most  objectionable  words, 
such  as  ''capitalistic  system."  The  phrase  is 
accurate,  even  though  the  word  ''capitalist"  has 
in  a  degree  become  odious.  We  must  call  things 
by  their  right  names.  In  England,  for  instance, 
a  gentleman  will  rarely  accept  a  sum  of  money 
as  compensation  for  his  services;  but  he  will 
cheerfully  pocket  an  honorarium — the  fiction 
being  that  the  services  have  not  been  performed 
for  money,  but  that  after  they  have  been  per- 
formed the  recipient  is  so  grateful  that  a  purse 
fairly  wells  out  of  him.  Such  verbal  dodgings 
do  not  alter  the  cold  facts,  but  they  do  confuse 
our  view.     And  we  want  a  clear  vision. 

If  one  employs  and  another  is  employed,  in 


246     When  the  Workmen  Help  You  Manage 

that  particular  relation  we  have  capital  and 
labor.  They  are  in  no  sense  partners,  but  are 
buyers  and  sellers.  If  they  are  good  buyers 
and  sellers,  if  they  are  skilful,  forehanded,  and 
know  each  other,  they  will  be  associates.  They 
will  remain  associates  just  as  long  as  they  find 
their  association  mutually  profitable  and  agree- 
able, and  no  longer.  That  is  the  system  under 
which  we  are  living  to-day  in  the  United  States 
— the  capitalistic  system. 

There  is  another  system,  in  which  men  do  not 
associate  themselves  for  profit,  but  are  content 
to  labor  only  for  the  right  to  live.  They  dedi- 
cate their  services  upon  a  general  stipulation 
that  they  and  all  their  fellows  shall  receive  from 
a  common  sources  each  a  like  amount  of  crea- 
ture comfort.  This  latter  plan,  with  various 
backings  and  fillings  and  a  plaintive  desire  that 
it  be  done  neatly  and  nicely,  is  socialism. 
Dropping  the  circumlocutions,  abandoning  the 
hope  of  having  both  the  penny  and  the  cake,  it 
becomes  what  we  to-day  call  Bolshevism,  simply 
because  the  Russians  applied  that  term  to  their 
most  direct  direct-actionists. 

The  first  system  gets  down  to  production  for 
profit,  the  second  to  production  for  use.  The 
first  needs  the  relation  of  capital  and  labor, 
the  second  dispenses  with  that  relation. 


In  Conclusion  247 

If  the  capitalistic  relation  is  to  continue,  cap- 
ital must  live,  and  so  must  labor.  In  the  past, 
in  many  instances,  capital  has  tried  to  destroy 
the  relations  by  not  paying  living  wages;  but, 
since  there  are  a  great  many  more  people  in 
the  group  called  labor  than  in  the  group  called 
capital,  and  the  human  body  is  a  wonderfully 
stalwart  thing  taken  in  the  mass,  capital  never 
did  succeed  in  destroying  the  relation  by  getting 
rid  of  its  servitors  through  attrition,  or,  to  be 
more  accurate,  through  malnutrition.  Now  the 
shoe  is  on  the  other  foot,  and  the  people  who 
labor  for  hire  are  threatening  to  destroy  capi- 
tal— not  by  the  respectable  though  wearisome 
process  of  starvation,  but  by  the  unrespectable 
but  exciting  torch  and  bullet. 

The  tide  of  this  battle,  to  be  sure,  has  been 
ebbing  and  flowing  through  many  a  year,  or  at 
least  since  the  time  when  gunpowder  withdrew 
from  the  few  the  armored  mastery  of  the  many. 
An  angry  peasant,  armed  only  with  a  club,  had 
little  chance  of  beating  up  the  excellent  steel 
boiler  that  concealed  his  lord  and  master ;  while 
the  lord  and  master,  traveling  about  in  his  tank, 
could  dispose  of  the  peasant  with  equanimity. 
But,  armed  with  a  rifle  and  seated  comfortably 
in  a  tree,  the  peasant  might  most  expeditiously 
speed  his  lord  and  master  to  kingdom  come. 


248     When  the  Workmen  Help  You  Manage 

So  now  we  come  to  the  nub  of  the  matter. 
The  physical  force  is  not  with  the  employer, 
but  with  the  employee,  taking  the  situation 
broadly.  The  ultimate  might  is  with  labor  and 
not  with  capital. 

If  capital  is  to  survive,  it  is  because  it  is  good 
and  right  and  performs  a  function  that  gives  it 
a  title  to  life.  It  will  live  if  it  can  demonstrate 
that  the  worker — the  man  who  has  not  capital — 
gets  more  in  association  with  it  than  without  it. 
The  worker  must  get  not  only  more  money  but 
more  dignity  of  position,  more  opportunity  for 
self-expression,  and  a  wider  scope  for  creative 
energy — in  short,  greater  comfort  and  cultural 
advantages  with  than  without.  That  is  the 
labor  problem. 

I  have  pointed  this  out  in  foregoing  chapters 
in  more  concrete  form — that  is,  more  concretely 
in  that  I  have  tried  to  give  a  specific  example  at 
each  point  of  progression.  But  I  am  insistent 
that  when  one  grasps  the  fundamentals  one  is 
not  led  away  from  the  great  throbbing  cause  by 
mere  embellishments — such  as  methods  of  hir- 
ing and  firing,  employment  policies,  welfare 
work,  and  the  no  end  of  incidentals  that  are  so 
much  easier  to  grasp  than  the  actual  condition 
in  all  its  coldness. 

Here  in  America  we  have  not  in  any  large 


Ill  Conclusion  249 

degree,  as  yet,  been  forced  to  consider  this  ques- 
tion. It  is  true  tliat  the  I.  W.  W.  has  made 
large  progress,  but  essentially  we  in  America  are 
on  the  fringes  of  the  fight.  Abroad  capital  and 
labor  are  face  to  face.  In  Russia  capital  has 
been  destroyed.  It  is  asking  what  it  may  do  to 
be  saved  in  Italy,  France,  Austria-Hungary, 
and — ^in  a  greater  degree  than  is  generally 
known — in  England.  We  may  or  may  not  be 
next  called  up.  That  remains  largely  with  us. 
And  thus  my  somewhat  academic  prelude  gets 
down  to  the  hard  facts,  which  are  not  to  be 
dodged. 

I  most  firmly  believe  that  the  capitalist  sys- 
tem is  the  best,  if  it  is  grasped  in  its  entirety — 
if  it  is  understood,  and  if  it  is  administered  with 
skill  and  intelligence.  I  think  it  is  perfectly 
possible  to  balance  the  relations  between  the 
man  who  works  with  his  money  and  the  man  who 
works  with  his  hands,  so  that  each  will  be  con- 
tent, not  with  his  share,  for  that  is  impossible, 
but  with  the  fairness  of  the  division,  and  will  be 
entirely  satisfied  that,  when  a  dispute  arises,  it 
is  the  detail  and  not  the  system  that  is  at  fault. 

I  think  that  this  end  is  to  be  attained  not  by 
confusing  what  each  is  after,  but  by  a  mutually 
scientific  and  ever  flexible  give  and  take  with 
sufficient  safeguards  to  insure  fairness. 


250     When  the  Workmen  Help  You  Manage 

What,  then,  does  capital  want,  and  what  does 
labor  want?  Capital  wants  an  adequate  re- 
turn upon  the  money  it  invests.  * '  Adequate  re- 
turn" is  determined  by  the  circumstance  of  the 
particular  case,  and  is  a  variable  factor,  depend- 
ing upon  the  then  purchasing  power  of  money 
and  upon  the  risk  involved.  In  other  words, 
capital  wants  to  be  able  to  live  decently,  with  a 
certain  amount  of  leisure  and  with  a  certain 
additional  increment  to  guard  it  against  the 
hazards  of  its  adventures.     Capital  is  human. 

What  does  labor  want?  Nearly  the  same 
thing  that  capital  wants.  It,  too,  is  human. 
But  it  lacks  and  therefore  wants  a  dignity,  a 
right  of  expression,  and  the  opportunity  (just 
as  does  capital)  to  reap  a  considerable  material 
reward  for  exceptional  skill  or  forehandedness. 

It  is  trite  indeed  to  say  that  capital  is  useless 
without  labor,  and  labor  without  capital.  It 
is,  of  course,  true ;  but  it  is  to  be  remembered 
that  they  perform  very  different  functions. 
Capital  provides  the  materials  and  implements 
and  the  skill  of  management,  which  includes  the 
purchasing  of  the  raw  product  and  the  disposal 
of  the  finished.  Labor  does  the  work  of  trans- 
formation or  fabrication.  They  are  comple- 
mentary forces. 

In  modern  systems  of  manufacture  there  has 


In  Conclusion  3^1 

been  a  growing  tendency  to  make  the  man  the 
attendant  of  the  machine,  and  to  preclude  the 
exercise  of  individual  control  or  expression. 
This  is  to  stifle  the  great  creative  side  of  the 
man — to  employ  something  less  than  the  whole 
man. 

For  instance,  what  we  know  as  repetitive 
operations  go  to  make  up  a  considerable  part  of 
manufacture,  and  in  some  large  companies  this 
has  been  carried  so  far  that  a  workman  not  only 
performs  a  very  small  portion  of  what  used  to 
be  regarded  as  a  single  operation,  but  so  infi- 
nitely is  the  work  subdivided  that  it  is  more  than 
probable  that  the  individual  workman  does  not 
even  know,  in  more  than  perhaps  a  very  general 
way,  the  eventual  destination  of  the  part  on 
which  he  is  working,  or  exactly  what  is  its  func- 
tion in  the  finished  product. 

His  only  knowledge  of  whether  or  not  he  is 
doing  his  work  correctly  comes  from  the  accept- 
ance or  rejection  of  his  pieces  on  inspection. 
He  has  no  chance  whatever  to  exercise  the  crea- 
tive force  of  craftsmanship. 

Therefore  a  part  of  the  adjustment  of  the  re- 
lation— and  by  no  means  a  small  part — is  the 
restoring  of  interest  in  the  work.  The  work  it- 
self must  hold  this  interest,  not  merely  the  sur- 
roundings; and  it  is  not  at  all  impossible  so  to 


252     When  the  Workmen  Help  You  Manage 

order  matters  that  the  man  may  become  master 
of  his  machine,  using  it  as  a  great  tool,  instead 
of  being  an  undignified  subject  of  the  machine. 

It  is  possible,  in  most  instances,  to  permit  a 
man  to  know  exactly  what  he  is  doing,  to  let 
him  Know  that  his  part  in  the  scheme  of  manu- 
facturing is  an  essential  one — that,  although  he 
may  be  but  making  a  washer,  unless  this  washer 
is  exactly  right  the  entire  completed  machine 
may  fail  properly  to  function.  Further,  he  may 
be  provided  with  methods  of  judging  his  own 
record,  and,  although  he  can  not  perhaps  exer- 
cise the  full  craftsmanship  of  the  days  of  hand 
tools,  he  can  attain  the  mastery  of  his  machine ; 
and  that  will  be  satisfying. 

I  recall  one  old  workman  who  became  sin- 
cerely attached  to  a  heavy  planer  on  which  he 
had  worked  for  many  years.  He  regarded  the 
planer  as  his  own,  and  he  got  such  surprising 
results  out  of  it  that  the  management,  although 
they  repeatedly  planned  to  scrap  the  ancient 
tool,  never  did  so  because  this  workman  at- 
tained as  high  a  production  as  did  other  work- 
men with  modern  planers.  This  seems  like  bad 
shop  practice,  and  it  might  well  be  said  that  this 
particular  workman  would  have  done  better  work 
with  a  modern  planer;  but  it  so  happened  that 
he  had  amassed  a  little  competency,  and  he  re- 


In  Conclusion  253 

fused  to  work  excepting  on  his  own  beloved 
machine ! 

An  enormous  force  is  neglected  when  creative 
craftsmanship  is  disregarded.  I  have  known 
men  almost  without  effort  to  double  production 
simply  because  their  interest  was  awakened,  and 
cases  have  come  under  my  observation  in  which 
the  workers,  being  deeply  interested,  were  not 
really  very  much  concerned  with  the  pay  that 
they  received.  Although  it  is  perfectly  feasible 
so  to  interest  men  in  their  work  that  they  will 
not  bother  about  their  pay, — and  it  is  good  so 
to  do,  because  then  the  worker  is  realizing  his 
life  in  his  work, — it  is  not  fair  on  the  part  of 
the  management  to  pay  other  than  the  highest 
possible  rate  or  leave  it  with  the  men  them- 
selves to  determine  whether  that  rate  be  fair. 
That  one  "can  not  live  by  bread  alone"  is  true, 
but  it  does  not  connote  that  one  may  be  able  to 
live  without  bread. 

By  the  stimulation  of  this  creative  instinct 
the  way  is  pointed  out  to  the  ideal  wage  situa- 
tion in  which  both  a  high  standard  of  workman- 
ship and  a  high  rate  of  speed  will  be  achieved. 
These,  of  necessity,  make  a  high  wage  economi- 
cal in  cost  and  result — which  is  the  ideal  situa- 
tion. 

We  have  heard  a  great  deal  about  intensive 


254     When  the  Workmen  Help  You  Manage 

production,  but  intensive  production  is  not  to  be 
realized  by  any  force  that  comes  from  the  out- 
side. You  can  not  drive  a  man — he  is  bound  to 
rebel.  You  can  lead  a  man — but  the  qualities  of 
leadership  are  rare.  The  force  should  come 
from  within,  and  then  the  man  will  work  with 
less  fatigue  than  under  any  other  circumstances. 
If  we  take  the  standard  of  production  as  one 
hundred,  I  can  say  that  it  is  impossible  to  force  a 
man  much  above  fifty,  and  even  then  after  a  few 
days  he  will  become  rebellious  and  lag,  and  the 
quality  of  the  work  will  suffer.  But  if  the  crea- 
tive power  of  that  man  be  stimulated,  he  can 
almost  constantly  touch  one  hundred,  appar- 
ently without  the  slightest  effort. 

Look  at  this  subject  of  wages.  Wages  are 
not  all.  If  only  a  wage  is  involved,  it  is  almost 
certain  that  the  relation  will  be  an  unhappy  one ; 
but  if  the  wage  be  not  right  the  profits  of  capi- 
tal and  labor  will  be  unevenly  balanced  and  the 
relation  is  certain  to  be  an  unhappy  one.  I  am 
confident  that  as  yet  we  have  not  realized  any- 
thing even  approaching  the  limit  in  wages.  I 
do  not  mean  wages  in  mere  dollars,  for  those 
values  are  shifting.  But  we  have  not  yet  so 
ordered  the  entire  plan  of  manufacturing  or 
sufficiently  utilized   the   dormant   creative   in- 


In  Conclusion  255 

stincts  to  be  able  even  to  visualize  the  limits  of 
per-man  production. 

It  is  an  axiom  that  high  wages  can  not  prop- 
erly be  paid  unless  the  efficiency  be  progressive 
— that  is  to  say,  unless  the  wages  can  be  raised 
and  at  the  same  time  the  net  cost  of  the  product 
to  the  consumer  lowered.  Any  raise  in  wages 
that  is  added  to  the  cost  of  the  product  is  not  a 
raise  at  all;  for  it  must  inevitably  be  reflected 
in  a  higher  cost  of  living,  and  therefore  in  an- 
other demand  for  an  even  higher  wage.  Add- 
ing a  wage  increase  to  the  cost  of  the  product 
starts  one  around  the  vicious  circle  to  which  we 
have  become  so  accustomed  during  the  war. 

The  point,  then,  is  to  find  a  ratio  between 
wages  and  cost  of  production  that  will  insure  to 
the  worker  his  proper  share  and  that  will  insure 
to  the  capitalist  a  product  that  may  be  sold  at  a 
profit,  and  at  the  same  time  constantly  to  de- 
crease in  this  process  the  costs,  so  that  the  prod- 
uct may  be  distributed  in  increasing  volume  and 
the  values  preserved  so  that  the  wages  when 
paid  may  mean  something. 

This  is  obviously  a  management  problem  and 
not  merely  a  wage  problem.  It  goes  to  the  capi- 
talization of  the  company,  to  the  fixed  charges, 
to  administrative  efficiency,  and  to  proper  shop 


256     When  the  Workmen  Help  You  Manage 

management.  If  more  capital  is  involved  than 
should  be,  then  of  course  the  right  return  can 
not  be  had  on  it,  any  more  than  a  grocer  could 
expect  to  have  delivery  economy  if  he  was  using 
a  splendid  limousine  instead  of  a  light  motor. 

Too  high  a  funded  indebtedness  falls  into  the 
same  category,  for  the  interest  on  that  indebted- 
ness must  be  charged  into  the  cost  of  the  prod- 
uct. You  can  not  expect  a  workman  to  turn  out 
a  low-cost  article  if  that  with  which  he  works  is 
loaded  with  a  big  mortgage  debt.  In  the  same 
manner,  the  workman  can  not  function,  and 
capital  can  not  realize  its  best,  if  the  shop  oper- 
ations or  sequence  of  operations  are  not  planned 
to  attain  economy  of  effort. 

In  the  view  of  capital  that  I  have  taken,  the 
right  return  is  not  to  be  expected  unless  the 
work  is  planned  for  the  worker.  I  have  else- 
where noted  a  shop  in  which  sixty  per  cent,  of 
the  wage,  because  of  faulty  tool  arrangement, 
was  paid  for  walking  and  not  for  working,  and 
I  could  cite  many  more  such  instances. 

Capital  can  find  its  greatest  opportunity  in  so 
conserving  itself  that  the  turnover  will  be  fre- 
quent— in  not  keeping  any  part  of  itself  idle  to 
retard  turnover,  in  so  arranging  tools  and  ma- 
chinery that  there  will  be  no  waste  of  effort,  and 
then  in  recovering  waste  or  by-products  in  or- 


In  Conclusion  257 

der  further  to  gain  a  profit  from  that  which  the 
individual  worker  or  a  small  unit  would  of  ne- 
cessity waste.  The  large  packing  firms  make 
their  profit,  not  on  the  sale  of  meat,  but  on  the 
by-products. 

When  we  speak  of  the  relation  of  capital  and 
labor,  we  are  talking  about  a  broad  economic 
problem  with  many,  many  sides,  and  are  not 
merely  dealing  with  the  incidental  determina- 
tion of  what  we  shall  pay  this  or  that  individual. 

Turning  to  wages,  this  management  problem 
again  looms  up;  for  we  find  at  once  that  the 
wage  to  be  considered  is  not  that  by  the  day  or 
the  week  or  the  month,  but  by  the  year,  and  that 
permanency  of  employment — that  is,  the  provi- 
sion of  twelve  months'  work — is  a  paramount 
consideration. 

Many  a  business  considers  that  its  product  is 
seasonal.  It  considers  that  a  man  may  be  taken 
on  or  laid  off  according  to  the  condition  of  the 
business.  It  does  not  consider  that  this  man, 
if  the  best  results  are  to  be  had,  should  be  em- 
ployed during  the  entire  twelve  months,  and 
that  it  is  the  business  of  management  so  to  order 
its  planning,  its  sales  area,  its  articles  of  manu- 
facture, and  so  on,  that  the  worker  may  be  en- 
gaged constantly. 

It  may  be  pointed  out  that  this  feature  is  no 


258     When  the  Workmen  Help  You  Manage 

less  important  to  capital  than  it  is  to  labor; 
for  if  we  work  a  plant  only  half  or  three  quar- 
ters of  a  year,  the  product  must  bear  the  burden 
of  the  whole  year,  and  therefore  the  overhead 
during  the  time  of  operation  will  be  unduly 
high.  ^ 

One  of  the  functions  of  capital  is  to  provide 
for  twelve  months'  employment,  and  that  fact  is 
recognized  in  almost  every  industrial  country 
except  America.  It  is  one  of  the  secrets  of 
German  low-cost  production,  and  it  is  now  rec- 
ognized in  England  not  so  much  as  a  managerial 
as  a  social  problem  in  the  way  of  unemployment 
allowances.  Recommendations  have  recently 
been  made  in  England  for  a  drastic  revision  of 
unemployment,  to  the  end  that  when  a  man  is 
not  working  he  shall  receive  an  allowance  from 
the  State.  This  allowance  must,  of  course,  be 
raised  by  taxation,  and  industry  will  hardly  be 
able  to  bear  both  the  burden  of  taxation  and  the 
burden  of  plant  charges  on  an  idle  plant.  The 
provision  of  a  full  year's  work  is  a  sales  and  ex- 
ecutive problem  of  great  magnitude,  for  which 
no  rules  are  possible.  It  is  a  question  of  each 
working  out  his  own  salvation. 

From  what  I  have  previously  stated,  it  might 
be  inferred  that  the  balance  in  compensation  be- 
tween labor  and  capital  could  be   arrived  at 


In  Conclusion  259 

through  some  system  of  sharing  profits ;  but  a 
realization  of  the  true  relation  will,  I  think, 
show  that  profit-^sharing  is  essentially  illogical. 

Capital  employs,  labor  is  employed.  Their 
combined  efforts  may  not  of  necessity  result  in 
a  profit.  Profit  is  a  reward  for  proper  capital 
management.  The  worker  may  by  his  lack  of 
diligence  produce  an  article  the  cost  of  which 
is  so  high  that  it  can  not  well  be  sold  at  a  profit. 
That  is,  of  course,  bad  workmanship.  But,  on 
the  other  hand,  the  worker  may  deliver  to  cap- 
ital a  good  article  at  a  fair  price,  and  then  cap- 
ital may,  by  stupidity  of  management,  forfeit 
the  profit.  The  worker  is  entitled  to  pay  for 
his  contribution,  and  for  nothing  else.  Profit 
depends  upon  many  factors  other  than  the  ac- 
tual work  in  the  shop.  To  "share"  is  but  to 
deceive. 

Profit-sharing  is  not  only  illogical,  it  is  also 
impractical.  The  average  worker,  paid  long 
after  his  performance,  as  must  be  the  case  when 
profits  are  "shared,"  does  not  associate  the 
work  with  the  money  he  receives,  and  so  the  in- 
centive to  better  workmanship  is  lost. 

There  is  no  common  ground  upon  which 
profits  may  be  shared  between  the  representa- 
tives of  capital  and  the  representatives  of  la- 
bor ;  but,  in  most  schemes  of  profit-sharing  that 


260     When  the  Workmen  Help  You  Manage 

have  come  under  my  observation,  wliat  is  really 
distributed  is  a  bonus  and  not  at  all  a  profit. 
Regarded  as  a  bonus,  the  money  is  infinitely 
more  effective  if  paid  in  connection  with  the 
work  done  and  at  the  time  it  is  done. 

What,  then,  is  the  right  way  to  pay  wages! 
There  is  no  single  system ;  but,  generally  speak- 
ing, an  incentive  should  be  provided  so  that 
wages  may  be  measured  by  effort,  care  being 
taken  not  to  put  the  emphasis  on  quantity  to  the 
exclusion  of  quality,  and,  by  stimulation  of  the 
creative  instinct,  to  avoid  any  possible  forcing 
of  a  man  from  the  outside. 

I  do  not  favor  piece  rates ;  neither  do  I  favor 
paying  a  man  solely  for  the  time  that  he  spends 
in  the  shop,  unless  the  man  be  a  watchman.  It 
is  not  his  presence,  but  his  work,  that  counts. 

Piece  rates  have  their  proper  place,  provided 
those  rates  are  scientifically  set  by  timing,  pro- 
vided the  standards  are  fair,  and  provided  that 
the  incentive  is  of  a  definite  nature  fully  under- 
stood by  the  worker.  I  have  already  sketched 
these  several  methods. 

On  top  of  the  individual  incentive  comes  a  de- 
partmental incentive,  based  upon  the  work  of 
the  department  as  a  whole.  Thus  each  man 
and  each  department  finds  that  it  can  and  will 
be  paid  for  what  it  does,  and  that  payment  de- 


In  Conclusion  261 

pends,  not  upon  any  outside  force,  but  solely 
upon  the  service  of  the  people  themselves. 

However,  it  is  not  enough  to  state  fair  rates 
and  fair  incentives.  The  men  must  know  that 
they  are  fair,  and  the  only  way  that  they  can 
know  they  are  fair  is  by  giving  to  them  the 
means  constantly  to  review  the  rates,  to  settle 
disputes,  and  to  provide  better  ways  of  doing 
things. 

This  is  to  introduce  a  very  considerable  and 
eventually  an  entire  self-government  within  the 
factory.  I  do  not  advocate  any  particular  form 
of  self-government,  except  that  it  is  essential 
that  the  men  by  secret  ballot  choose  their  own 
representatives,  that  they  are  encouraged  to  be 
constructive  and  not  merely  complaint-gather- 
ers, and  that  what  they  do  and  what  they  say 
in  their  meetings  shall  be  privileged :  the  man- 
agement shall  not  interfere  in  any  way,  al- 
though reserving  the  power  of  veto. 

My  own  idea,  dra^vn  from  my  experience,  is 
that  it  is  not  well  to  begin  with  too  sudden  a 
change  from  the  autocratic  to  the  democratic 
form  of  government.  (I  do  not  use  the  word 
*  *  autocratic ' '  in  any  invidious  sense. )  It  is  bet- 
ter gradually  to  appoint  committees  as  the  need 
arises,  and  then  finally  from  these  committees 
to  work  out  a  representative  legislature,  just  as 


262     When  the  Workmen  Help  You  Manage 

the  Government  of  the  United  States  grew  out 
of  the  colonial  government. 

The  tirst  committee  that  naturally  presents 
itself  is  one  on  inspection.  This  is  always  a 
point  of  clash  between  the  management  and  the 
men,  and  an  inspector  chosen  by  a  committee, 
and  by  it  supervised,  will  give  far  greater  satis- 
faction both  to  the  management  and  the  men 
than  can  possibly  an  inspector  appointed  solely 
by  the  management.  Giving  this  committee  the 
power  to  nominate  an  inspector  places  with  its 
members  at  the  very  beginning  a  constructive 
intent,  and  takes  them  out  of  the  category  of  a 
mere  court  for  the  hearing  of  complaints.  Tak- 
ing the  experience  of  the  English  shojD  commit- 
tees, which  are  not  constructive,  I  think  the 
forming  of  any  kind  of  a  committee  solely  to 
settle  disputes  will,  in  the  end,  do  more  harm 
than  good. 

Following  out  the  plan,  committees  may  be 
appointed  on  efficiency,  on  economy,  and  finally 
on  rates  and  wages.  The  chief  reason  that  the 
word  ^'eflSciency"  has  become  so  detested  is 
that  rarely  do  the  men  know  why  the  new 
method  offered  them  is  better  than  the  old. 
They  see  in  ''efficient  methods"  only  a  greater 
profit  for  the  employer  and  greater  work  for 
themselves.     But  if  methods  are  introduced  by 


In  Conclusion  263 

and  with  the  consent  of  a  committee,  if  their 
counsel  be  taken,  if  it  be  made  their  plan  before 
introduction,  then  it  is  bound  to  succeed.  They 
will  then  have  not  only  a  paternal  interest  in 
the  plan,  but  they  will  also  know  by  the  cost 
sheets  before  them  exactly  how  this  added  effi- 
ciency can  be  reflected  in  higher  and  higher 
wages. 

Going  forward  with  the  consideration  of  the 
committees,  one  naturally  finds  a  necessity  for 
some  representative  body  to  which  all  commit- 
tees are  answerable;  and  then  we  further  find 
a  necessity  for  drawing  together  foremen  and 
superintendents,  in  order  that  their  brains  may 
be  pooled  as  well  as  the  brains  of  the  workers. 
Eventually  the  management  will  find  it  needs  a 
body  of  a  similar  character,  and  thus  we  shall 
have  erected  an  entire  system  of  self-govern- 
ment. 

I  do  not  advocate  this  self-government  for 
itself.  I  am  not  at  all  sure  that  the  individual  is 
not  as  happy  under  a  skilled  autocracy  as  under 
a  democracy.  The  usual  democracy  in  politics 
is  unskilled.  It  muddles  through.  But  that 
which  I  advocate  is  a  democracy  of  skill,  and  I 
advocate  it  in  order  that  the  men  may  find  an 
opportunity  to  express  themselves  in  their 
work. 


264     WJien  the  Workmen  Help  You  Manage 

They  are  not  at  one  with  the  management  in 
point  of  compensation.  The  men  and  the  man- 
agement draw  their  compensation  from  differ- 
ent quarters.  But  they  can  and  should  be  at  one 
in  this  matter  of  intent,  of  desiring  to  bring 
about  such  an  order  of  affairs  within  the  fac- 
tory that  both  may  receive  the  highest  possible 
compensation  and  put  into  their  work  the  great- 
est dignity. 

Were  it  possible  to  insure  men  of  fairness, 
and  to  make  each  job  in  itself  a  full  outlet  for 
creative  energy,  I  believe  that  no  form  of  de- 
mocracy would  be  necessary;  but  all  of  this  is 
not  possible — or,  rather,  I  should  say  we  do  not 
as  yet  know  how  to  develop  the  creative  faculty 
for  every  job,  nor  have  our  managers  suf- 
ficiently advanced  in  technique  to  be  sure  that 
their  decisions  as  to  division  of  moneys  are  fair. 
Therefore  we  cut  right  through  this  by  putting 
the  responsibility  of  fairness  on  the  men  them- 
selves, by  giving  them  the  facts ;  and,  while  by 
this  one  stroke  we  eliminate  much  of  the  dis- 
content, we  also  add  dignity  to  the  labor  by 
making  it  their  labor,  and  permit  a  fulness  of 
expression,  if  not  in  the  work  itself,  in  the  rea- 
son for  the  work. 

There  is  no  fixed  plan,  no  set  of  rules,  only  a 
set  of  principles ;  and,  until  these  principles  are 


In  Conclusion  265 

mastered  and  applied  with  skill,  it  is  impossible 
to  say  what  in  any  case  is  most  required.  These 
principles  are  elastic,  in  a  degree.  They  are, 
roughly,  these : 

(1)  Capital  and  labor  are  not  partners,  but 
are  in  the  position  of  buyers  and  sellers. 

(2)  Each  is  to  be  rewarded  for  what  it  does, 
and  for  nothing  more. 

(3)  The  dignity  of  capital  is  assured;  the 
dignity  of  labor  must  be  assured. 

(4)  The  dignity  of  labor  will  in  part  come 
about  through  the  expression  of  the  creative  in- 
stinct and  in  part  through  a  participation  in  con- 
trol at  least  of  those  matters  that  concern  la- 
bor. 

(5)  This  participation  may  take  any  form 
that  seems  suitable  to  the  case;  but  the  essen- 
tials of  the  participation  are  that  it  be  construc- 
tive and  free  from  managerial  interference,  al- 
though subject  to  managerial  veto. 

(6)  The  reward  of  labor  for  its  effort  should 
be  direct,  and  associated  in  time  of  payment 
with  the  work  done,  and  graduated,  after  a  liv- 
ing wage,  upon  the  quantity  or  quality  of  the 
work  done  with  departmental  as  well  as  individ- 
ual incentives. 

(7)  A  living  wage  is  to  be  calculated  on  the 


266     When  the  Workmen  Help  You  Manage 

annual    basis,    and    the    provision    of    twelve 
months'  work  is  an  integral  part  of  any  scheme. 

(8)  The  amount  of  the  wage  is  immaterial. 
It  is  the  ratio  to  production  that  counts,  and 
no  raises  of  wages  are  to  be  added  into  the  cost 
of  the  finished  product,  or  at  least  such  addi- 
tions are  not  to  be  counted  as  raises  of  wages. 

(9)  It  is  the  function  of  capital  to  provide 
facilities  and  plans,  so  that  the  worker  may  earn 
more  with  than  without  capital.  Otherwise 
there  is  no  reason  for  capital 's  being. 


THE  END 


Date  Due 

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